The government is close to finalising a Rs 3.5 lakh crore financial assistance package that would mandate state power distribution companies with high losses to either privatise operations or appoint distribution franchisees and invest in infrastructure upgradation, power minister R K Singh told ET.
The scheme will come with a gross budgetary support of Rs 1.2 lakh crore over five years will be result-oriented where the distribution companies will invest first and get money later, he said.
Singh also said a group of ministers headed by home minister Amit Shah has cleared the National Tariff Policy that would soon be sent to the Union cabinet for consideration.
The industry is awaiting the policy as a major reform by the stressed power sector but being opposed by state governments and discoms due to clauses like penalties for load shedding.
The reforms come close on the heels on finance minister Nirmala Sitharaman announcing a Rs 90,000 crore liquidity booster package aiming to help the power sector tide over an unprecedented cash crunch due to the nationwide lockdown to prevent the spread of Covid-19.