Throwing light upon the problem of huge debt owed by the Electricity DISCOMs to GENCOs of the country, suggest measure to tackle the same.

DISCOMs (Distribution Companies) total dues to GENCOs (Generation Companies) have rose over 37% year-on-year to Rs. 1.33 lakh crore in August 2020, causing a huge stress in the sector. The lockdown in the country has further jolt the electricity sector leading to massive fall in demand of electricity and a spiral of unpaid bills and accumulated losses. Several states allowed a moratorium to consumers from paying electricity bills. Government has announced a Rs. 90,000 crore loan scheme but how much it will rectify the present situation of DISCOMs and GENCOs remains to be seen as dues continue to increase.

Following steps can be taken to tackle the situation –

• The loan subsidies owed to DISCOMs to be paid monthly or quarterly, instead of once a year
• Having detailed action plans to reduce losses related to cost of supplies and revenue collection
• Loans were to be secured by receivables of DISCOMs and loan disbursements were to be released directly to generating and transmission companies.
• Redressal of DISCOMs complaints of loans being offered at higher interest rates.
• Proper and efficient collaboration between Centre and State governments regarding DISCOMs and GENCOs worries related to ever increasing debt.
• Developing a robust billing and collection mechanism supply including universal metering of consumers.
• Transparent system of apportion of costs involved in expenses of DISCOMs.
• Timely delivery of accurate bills and targeted subsidies.
• Proper implementation of the amendments to the Electricity Act, 2003.
• Stabilize the finances of DISCOMs and ensure financial recovery of power generators.

These measures can go to a great extent in reforming the DISCOMs and GENCOs woes and bring electricity sector out of this financial burden of huge debt.

Topics: GS-III: Infrastructure Energy Sector