‘Grant’ is the carrot for new Discom scheme

Ask anyone what is it that is stopping power sector reforms from happening despite the repeated attempts being made by successive governments and the answer you will get is lack of ‘political will’. Yes, Power Minister RK Singh has been on a mission mode, but you can lead a horse to water, you can’t make it drink. Therefore, Singh’s success will depend on how the States will respond to the Centre’s latest attempt to strengthen power distribution utilities (Discoms).

The Centre has recently approved the Revamped Distribution Sector Scheme — A Reforms-Based and Results-Linked Scheme — with an outlay of ₹3,03,758 crore and a Gross Budgetary Support of ₹97,631 crore from the Centre over a period of five years from FY 2021-22 to FY 2025-26. The scheme allows the Discoms the flexibility to draw up their modernisation plans keeping in view their own specific requirements. The assistance is conditional on the reforms being carried out.

What is notable here is that the scheme is not based on a one-size-fits-all approach. States can work out their own plans. The scheme seeks to improve the operational efficiencies and financial sustainability of all Discoms/Power Departments (excluding private sector Discoms) by providing financial assistance to Discoms for strengthening of supply infrastructure based on meeting pre-qualifying criteria as well as upon achievement of basic minimum benchmarks of reforms by the Discom evaluated on the basis of agreed evaluation framework.

The Scheme aims to reduce the AT&C (Aggregate Technical & Commercial) losses to pan-India levels of 12-15 per cent and ACSARR (Average cost of supply and Average cost of revenue realized) gap to zero by 2024-25.

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