PM Narendra Modi sets timeline for power sector reforms

Prime Minister Narendra Modi has set specific targets for the power sector reforms in the states, CNBC-TV18 has learnt. He has also suggested linking all centrally-funded schemes in the sector.

Besides institutional reforms, the Prime Minister has also asked the power ministry to incentivise and enable state governments to undertake effective discoms reform, according to a source privy to the information.

Currently, state discoms have a provisional loss on electricity supply at 21.6 percent against the target of 15 percent.

PM Modi has ordered the ministry to examine the existing provisions of Ujwal DISCOM Assurance Yojana (UDAY) scheme and initiate specific measures so that states which have signed MoUs fully comply with the implementation schedule.

“UDAY scheme was on the line of one size fits all, this time the idea is to do root cause analysis and accordingly a tailored target will be set for each state” said the source.

The target has been set to bring electricity losses of discoms to 15 percent and at 12.5 within three years of achieving 15 percent, along with a reduction of cross-subsidy progressively.

PM Modi has also asked for the acceleration of discoms with appropriate options like complete privatisation, public private partnership (PPP), and franchise models.

It is expected that the budget will have some announcement on discom reform even though the process of bringing states on board with targets will take another two-three months, the source added.

Another reform that is being driven by the PMO is that of bringing “time of day (TOD)” tariff for consumers by the year 2023. TOD is a tariff structure in which different rates are applicable for use of electricity at different time of the day.

Now, TOD tariff will be beneficial for the consumers as they will be charged according to the tariff for the time of use and not a flat tariff per unit.

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