New policies may revive power discoms

The upcoming Union Budget may bring about a new policy to reduce the losses of power distribution company and revive them.

Union Power Minister R.K. Singh on Monday said that the Power Ministry has discussed and proposed the new scheme with the Finance Ministry and was hopeful that it would find place in the Budget 2020-21.

The new scheme would include elements of the current UDAY scheme and would provide assistance for reduction of discoms' losses, he told reporters on the sidelines of an event here. 

Allocations under the new scheme will make allocations based on efficiency.

The minister said that the government aims to reduce the losses of discoms to 15 per cent from 18.79 per cent loss in the financial year 2018-19.

According to official sources, the scheme may come up as a revised version of UDAY -- UDAY 2.0 -- which would provide another lease of life to ailing power discoms by extending financial support in the form of loans and grants. 

This would support discoms to cover their payment to the generators and lenders while also investing in upgrading power infrastructure. 

The accumulated losses of all discoms have again shot up to over Rs 80,000 crore, as of now, out of which close to Rs 60,000 crore is overdue.

The new financial support scheme will come with stringent conditions of regular power tariff revision by discoms and bringing down AT&C (aggregate, technical and commercial) losses to a level of 15 per cent within a year. 

Non-adherance to conditions will stop loans and grants facility to state-run discoms.

The scheme for revival of stressed power discoms was launched in November 2015. The Ujwal Discom Assurance Yojana's (UDAY) prime objectives were financial turnaround and operational improvement of the discoms along with the reduction of cost of generation of power development of renewable energy energy efficiency and conservation.

Singh observed that the proposed new scheme would be replace the current multiple programmes into a single focussed initiative. The centre is contemplating to combine the features of UDAY scheme, Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) under an umbrella programme.