The Budget proposal to replace all conventional electricity meters by smart prepaid metres in the next three years, has created a huge flutter in the country’s financially weak electricity distribution sector, catering roughly to 21.4 crore (99.99 per cent) households.
At the current price of approximately ₹7,500 a smart prepaid metre, this move would require ₹1,60,500 crore. Assuming the mass procurement will bring down the average cost of a meters to ₹3,000; DISCOMs will still require over ₹64,000 crore in the next three years.
Raising such huge funds from the market is very difficult for majority of the DISCOMs, which are already financially stressed.
The DISCOMs’ financial woes are impacting the generation segment too.
As in November 2019, the generation sector had outstanding payment dues of ₹81,000 crore from the DISCOMs. States such as Rajasthan, which have undergone debt-restructuring under the UDAY scheme, reported 80 per cent rise in outstanding in 2019 (January to December).
Since the residential segment consumes lesser electricity, this move will neither benefit the consumers nor the DISCOMs.
In West Bengal not more than 15 per cent of the 1.5 crore subscribers consume over 300 units a month. This section along with commercial and industrial users cross subsidise the rest of the 85 per cent residential subscribers.
Finance Minister Nirmala Sitharaman in her Budget said, “The Ministry intends to promote ‘smart’ metering. I urge all the States and Union Territories to replace conventional energy meters by prepaid smart meters in the next 3 years. Also, this would give consumers the freedom to choose the supplier and rate as per their requirements”.
Analysts, DISCOM officials and State electricity regulators feel that the Finance Minister is mixing up issues.
First, there is a case for switching from the conventional meters to regular prepaid at an extra cost of ₹500-1,200 each. This will cost the distribution sector ₹15,000 crore. The manufacturers of smart meters can be nudged to bring down the price.