New power scheme to aim for fewer losses, offer supply choices

The upcoming Budget is likely to introduce a new scheme directed at the power sector that would replace the NDA government’s earlier scheme, UDAY, which had floundered in its attempt to revive the country’s power distribution companies (discoms).

Power Minister RK Singh had said earlier this week that UDAY was “not a failure”, but had also suggested that the new set of reforms would be stricter in its implementation. The project would combine elements of strengthening the distribution system and the trajectory of loss reduction of UDAY, Singh had earlier told The Indian Express.

“Now it will be conditional — if states follow the trajectory of loss reduction, we will give them the money for strengthening the system. UDAY envisaged that the development funds will be conditional, but it was never implemented,” he had said.

The new scheme is also expected to contain a plan to diversify power distribution across the country by moving from a mostly state-owned discom system to one where private firms would be allowed franchises to supply electricity to consumers.

“… I’m going to come out with a scheme whereby the consumer is given a choice, so that they have not one, but multiple supply agencies. So, the discom continues to be the owner of the wire system. But, at the supply end, there will be multiple agencies that will compete,” the minister had said.

According to him, this would ensure competition and better service and would also ensure timely collection of money for the power distributed. “It will also bring in the discipline required in the system whereby if you (the state) … want to give subsidies, you give it. But you will have to deposit the money upfront with the discom, which has not been happening,” Singh had said.

The Indian Express
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