Cabinet approves Rs 3 trn outlay for Power Reform scheme

Cabinet Committee on Economic Affairs (CCEA) has approved a Rs 3.03 trillion power distribution company (DISCOM) reform scheme on June 30, 2021. Under the scheme, Centre’s share will be about Rs 97,631 crore.

About DISCOM reform scheme

It is a reforms-based result-linked power distribution sector scheme. It will be applicable till 2025-2026. It was announced in union budget 2021. This scheme subsumes programmes like Integrated Power Development Scheme and Deen Dayal Upadhyaya Gram Jyoti Yojana. Scheme comprise of a compulsory smart metering ecosystem along the distribution sector, from electricity feeders to consumer level.  It included some 250 million households.

Funds provisions

Under the scheme, funds will be released to DISCOM and will be subject to them to meet reform-related milestones.

Who will implement the scheme?

State-run Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) have been nominated as nodal agencies to implement the scheme.

Why this scheme was launched?

This scheme was launched in order to improve operational efficiencies and financial sustainability of all DISCOMs or Power Departments. However, it does not include Private Sector DISCOMs. Financial sustainability will be provided to them on conditional basis in order to strengthen supply infrastructure. Financial assistance will be based on meeting a pre-qualifying criterion and upon achievement of a basic minimum benchmarks by DISCOM.

Aim of the scheme

Scheme was launched with the aim of bringing down India’s average aggregate technical and commercial loss to 12-15 % from current level of 21.4%. It also seeks to narrow deficit between cost of electricity and price at which it is supplied to zero by the year 2024-25. It will also provide reliability and quality of power supply.

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