The World Bank has approved a $250 million development policy loan (DPL) to Rajasthan for the improvement of the state’s electricity distribution sector under the ‘24×7 Power for All’ program.
The state government will receive the loan under ‘Second Programmatic Electricity Distribution Reform Development Policy Loan for Rajasthan’, a program formulated for the turnaround of the state’s electricity distribution sector. This is the second loan given to the state under the planned reform. The first loan was approved in March 2017.
The focus of the second phase of operations is to improve the credit ratings of distribution companies (DISCOMs), attract private investment in renewables sector, and upgrade service delivery.
The program will also support and strengthen the governance in the distribution sector, establish a performance management system, incentivise employees for improvement in performance, restructure DISCOMS debt and transfer considerable amounts to state, reduce the costs of energy procurement, improve operational performance of DISCOMs by publishing feeder level energy audits, increased usage of IT etc.
The DISCOMs in Rajasthan are responsible for 9.5 million electricity consumers. In July 2015, the state DISCOMs had a total outstanding debt of ₹780 billion. But financial restructuring, regular energy audits, unified billing system, increased usage of IT systems, and effective employee and customer engagement have helped the DISCOMs better their operational and financial performance.
This loan will deepen the institutional and operational reforms of DISCOMs which has been facilitated by the union government’s program called Ujwal DISCOM Assurance Yojna (UDAY) launched in 2015. Rajasthan government had joined the scheme in 2016.
Recently, Mercom reported that as of March 31, 2018, the tariff cost gap of DISCOMs across India decreased by 48 percent in the financial year (FY) 2017-18, per data provided on the UDAY portal. Most DISCOMs have revised their tariffs after joining the program, and this has helped in the goal achievement, substantially.