Draft guidelines issued for reforms-based result-linked scheme: Report

In the budget 2021, Finance Minister Nirmala Sitharaman announced Rs 3.05 lakh crore for the reform-based result-linked scheme for the period of 5 years for the viability of the power distribution companies (discoms). The aim of the scheme is to assist discoms in undertaking reforms and improve performance both operationally and financially. CNBC-TV18 has learned that power sector lenders PFC, REC has shared the draft guidelines with the discoms and has sought observations and comments by March 24.

The reforms part of the revamped scheme includes reduction of Aggregate Technical and Commercial (AT&C) or electricity supply losses to 12-15 percent by FY25. Similarly, it aims to reduce the Average Cost of Supply (ACS) and Average Revenue Realisation (ARR) or revenue collection losses to zero by FY25.

The scheme also plans to target 1005 metering for both consumers and agriculture by way of prepaid or smart prepaid metering by FY25. Capital Expenditure outlay for metering and discoms’ infrastructure work is pegged at Rs 1.5 lakh crore each for a period of 5 years. PFC and REC will be the nodal agency, a discom reform committee will be formed and a result valuation framework will be in place for the release of funds on the basis of specific achievements with maximum focus on financial sustainability.

“The new reform scheme looks very promising and the incremental disbursement has been linked to achievement by DISCOMs on specific parameters unlike UDAY. Metering along with specific reforms could be a game-changer” said a power sector analyst.

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