The Central government is planning a grant of over Rs 1.1 lakh crore to state power distribution companies under a new bailout scheme. The scheme will mandate discoms with high losses to either privatise operations or appoint distribution franchisees and invest in infrastructure upgradation.
The government expects to spend about Rs three lakh crore of investments in the distribution sector through the latest discom restructuring scheme.
The scheme, previously proposed to be named as Atal Distribution System Improvement Yojana (ADITYA), is likely to come up in the upcoming budget since the previous Ujwal Discom Assurance Yojna is expiring in March 2020. This will be packaged in three parts.
The first part envisages infrastructure upgradation including implementation of smart metering at a total outlay of Rs 2,30,000 crore, of which 15 percent is proposed to be supported by the Central government and 10 percent by the state. The Centre will contribute Rs 25,000 crore towards the fund.
The second part will require inefficient discoms to undergo institutional reforms to avail investment support. The scheme envisages lowering aggregate technical and commercial losses of discoms to 12 percent and eliminating gaps between their costs and revenue.
The Centre proposes to give up to 60 percent grant to the states, or about Rs 85,000 crore towards loss reduction measures, including segregating agriculture feeders and aerial bunch cabling, in this phase. State utilities will be eligible for additional grant for overachieving given targets. The discoms will have to choose to either operate under a public-private-partnership model or supply power through multiple franchisees in all circles of operation within nine months of joining the scheme.
The Centre is likely to give these state discoms the option to use the grant to meet their financial obligations to lenders and generation companies. The third part of the scheme will focus on development of human resource and future technologies at a central government support of about Rs 1,500 crore.
