Cabinet approves Rs 3.03 lakh crore reforms-based power distribution scheme

New Delhi [India], June 30 : The Union Cabinet on Wednesday approved a reforms-based and results-linked revamped distribution sector scheme.
The scheme seeks to improve the operational efficiencies and financial sustainability of all DISCOMs excluding private sector DISCOMs by providing them conditional financial assistance for strengthening of supply infrastructure.
Briefing reporters after the cabinet meeting, Power and New and Renewable Energy Minister RK Singh said the scheme will have an outlay of Rs3,03,758 crore with an estimated gross budgetary support from the central government of Rs 97,631 crore.
The scheme also aims at improving operational efficiencies of Power Departments.
A key feature of the scheme is to enable consumer empowerment by way of prepaid smart metering to be implemented in Public-Private-Partnership (PPP) mode. It is proposed to install approximately 10 crore prepaid smart meters by December 2023 in the first phase.
Singh said assistance will be based on meeting pre-qualifying criteria as well as upon achievement of basic minimum benchmarks by the DISCOM evaluated on the basis of agreed evaluation framework tied to financial improvements.
The minister said that revamped Distribution Sector Scheme aims to improve operational efficiencies and financial sustainability, by providing result-linked financial assistance to DISCOMs for strengthening supply infrastructure based on meeting pre-qualifying criteria and achieving basic minimum benchmarks.
He said the scheme aims at reduction of aggregate technical and commercial losses to pan-India levels of 12-15 per cent by 2024-25 and reduction of ACS-ARR gap to zero by 2024-25.
An official release said the scheme would be available till the year 2025-26. REC and PFC have been nominated as nodal agencies for facilitating the implementation of the Scheme.
Funds under the scheme would also be used for the development of applications related to the use of Artificial Intelligence in the distribution sector.
"This would promote the development of startups in the Distribution Sector across the country," the release said.
It said that the implementation of the scheme would be based on the action plan worked out for each state rather than a "one-size-fits-all" approach.
The release said ongoing approved projects under IPDS, DDUGJY along with PMDP-2015 for the Union Territories of Jammu and Kashmir and Ladakh are proposed to be subsumed in the scheme and the savings of Rs 17000 crore would be part of the total outlay of the scheme under the existing terms and conditions till their sunset on March 31 next year.
The funds would be available for the identified projects under Integrated Power Development Scheme and for the approved ongoing projects under Prime Minister's Development Program (PMDP) for the Union Territories of J&K and Ladakh under IPDS and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) till March 31, 2023.
The objectives of the scheme include developing institutional capabilities for modern DISCOMs
The scheme provides for annual appraisal of the DISCOM performance against predefined and agreed upon performance trajectories including AT&C losses, ACS-ARR gaps, infrastructure upgrade performance, consumer services, hours of supply and corporate governance.
DISCOMs have to score a minimum of 60 per cent marks and clear a minimum bar in respect to certain parameters to be able to be eligible for funding against the scheme in that year.
The scheme has a major focus on improving electricity supply for the farmers and for providing daytime electricity to them through solarization of agricultural feeders.
Under the scheme, works of separation of 10,000 agriculture feeders would be taken up through an outlay of almost Rs 20,000 crore, which would be highly beneficial to the farmers who would get access to dedicated agriculture feeders providing them reliable and quality power.
This scheme converges with the Pradhan Mantri Kisan Urja Suraksha Evem Utthan Mahabhiyan (PM-KUSUM), which aims to solarize all feeders, and provide avenues for additional income to farmers.
The release said that smart meters would allow consumers to monitor their electricity consumption on a routine basis instead of a monthly basis, which can help them in the usage of electricity as per their own needs and in terms of the resources available.
While in all 25 crore smart meters are planned to be installed during the scheme period, priority would be given to install such meters in a mission mode in the first phase in - all electricity divisions of 500 AMRUT cities, with AT&C Losses are more than 15 per cent, all union territories, MSMEs and all other industrial and commercial consumers, all government offices at block level and above and other areas with high losses.
The progress of installation of prepaid smart meters would be monitored closely, especially those in Government Offices, to enable their installation in a time-bound manner.
Looking into the scattered nature of agricultural connections and their remoteness from the habitations, agricultural connections would be covered only through feeder meters, the release said.
Along with the time-bound implementation of prepaid smart metering for consumers, it is also proposed to take up system metering at Feeder and Distribution Transformer (DT) level "with communicating feature simultaneously in PPP mode".
It said Artificial Intelligence would be leveraged to analyze data generated through IT/OT devices including system meters, prepaid smart meters to prepare system-generated energy accounting reports every month to enable DISCOMs to take informed decisions on loss reduction, demand forecasting, Time of Day (ToD) tariff, renewable energy (RE) integration and for other predictive analysis.
"This would contribute a great deal towards enhancing operational efficiency and financial sustainability of the DISCOMs," the release said.
The release said that in addition, the DISCOMs can also avail of an additional special incentive of 50 per cent of the grants if they install the targeted number of smart meters by December 2023.
"For works other than smart metering, maximum financial assistance given to DISCOMs of 'Other than Special Category' states will be 60 per cent of the approved cost, while for the DISCOMs in the Special Category States, the maximum financial assistance will be 90 per cent of the approved cost," it added.