All states come on board for Rs 3 trillion discoms reforms scheme

States have been given till December to submit loss reduction plan; many of them will do so by October, says power minister

States are in consensus with the Centre on the Rs 3-trillion power distribution reforms scheme launched this year, said R K Singh, union minister for power, new and renewable energy.

Singh held a virtual meeting with state power ministers on Thursday. He said, however, the states have been given a two-month extension--till this December--to submit their loss reduction plan.

"Almost all states have said that they will reduce their losses and draft a plan for it. Most of them will be able to submit their plan by October," Singh said, adding the ministry will handhold states in preparing their loss reduction plans.

The new 'Reforms-based and Results-linked, Revamped Distribution Sector Scheme' seeks to improve the operational efficiencies and financial sustainability of all discoms/power departments (excluding private sector discoms) by providing conditional financial assistance to discoms for strengthening of supply infrastructure.

The assistance will be based on meeting pre-qualifying criteria as well as upon achievement of basic minimum benchmarks by the discom evaluated on the basis of agreed evaluation framework tied to financial improvements. Implementation of the Scheme would be based on the action plan worked out for each state, this paper had reported earlier. An annual appraisal of discoms would be done to check their progress and funding would be disbursed accordingly.

The Scheme will have an outlay of Rs 3,03,758 crore with an estimated gross budgetary support from the Central Government of Rs 97,631 crore. All the existing power sector reforms schemes namely DDUGJY, IPDS, PM-KUSUM scheme would be subsumed into this umbrella program. Singh said till yet Rs 2 lakh crore has already been given to the states under these schemes.

"The two key focus areas of the reform plan are strengthening the power supply system and modernising it. I want every discom to have an IT wing," he said.

Under the modernisation plan, SCADA, Demand management system, digital systems, smart prepaid meters etc would need to be installed.

Singh said states are required to prepare their plan based on thorough system study assessing the demand and the weaknesses in their power systems.

The scheme has been designed as a bottom-up scheme and the discoms/States are empowered to prepare their own detailed project reports (DPRs) based on their need assessments prioritizing the loss reduction works, the minister said.

During the meeting, Singh said states were also encouraged to avail benefits of PM-KUSUM scheme for solarisation of agricultural feeders.

State owned lenders Rural Electrification Corporation and Power Finance Corporation have been nominated as nodal agencies for facilitating implementation of the Scheme.

State-owned discoms across the country and financially and operationally beleaguered despite four reform schemes in the last 15 years. The earlier discom reform scheme UDAY concluded in FY20 with most of the states failing to meet their stipulated targets and still in red.