Reportedly, the ministry of power (MOP) is working on new ‘reform-linked distribution scheme’ with a two-fold objective of (i) overhauling the power distribution sector and (ii) building robust supply infrastructure. Involving total capital outlay of Rs 312,000 crore, the scheme will be funded by the union government and states in the ratio of 60:40 respectively. While, 60% of the proposed investment or about Rs 180,000 crore will come as Central grant, the balance will be borne by states. This umbrella scheme will subsume all existing schemes such as Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) into itself. DDUGJY is aimed at metering every rural household and improving electricity infrastructure in villages. IPDS targets improvement in...
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Category: Tariff Policies & Subsidies
Powerless power sector
The much-touted power reforms have not taken off as netas remain in election mode. As a result, industries continue to pay high tariff and discoms continue to report losses Under the Atmanirbhar Bharat Abhiyan scheme unveiled in May, Finance Minister Nirmala Sitharaman had promised a special loan of Rs 90,000 crore to fledgling power distribution companies (discoms) to enable them to clear their dues to independent power producers (IPPs) and generators in the public sector viz. National Thermal Power Corporation (NTPC) and so on, subject to their implementing certain reforms. The Government is now keen on hiking the loan amount to Rs 1,25,000 crore and relaxing reform conditions. This is not the first time that discoms are in dire financial...
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High power tariff – no respite for consumers
For almost two decades now, the successive governments have made exhortation about reforming the fledgling power sector with the three-fold objective of (i) supplying electricity at affordable rates; (ii) reducing the burden of subsidy and (iii) make power distribution companies (discoms) viable. Whether, it is the provision for reform the power purchase agreements (PPAs), ‘open access’ under the amended Electricity Act (2003), reducing cross-subsidy so as lower tariff to industries and businesses, increasing the share of renewals in total supply, opening of power exchanges for trading of electricity, direct benefit transfer (DBT) of subsidy to the target beneficiaries and so on, the aforementioned objectives resonate in each of these reforms. Yet, it is ironical that when it comes to developing...
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Power sector in crisis, reforms a mirage
The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by Finance Minister Nirmala Sitharaman in five tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] such as the National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component provides for special loan of Rs 90,000 crore from Rural Electrification Corporation [REC] and Power Finance Corporation [PFC] to discoms to enable them to clear their dues to IPPs and PSUs. But there are...
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Power reforms – chasing a mirage
The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by the finance minister, Nirmala Sitharaman in 5 tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component under the first tranche provides for a special loan of Rs 90,000 crore from Rural Electrification Corporation [REC], Power Finance Corporation [PFC] to discoms to enable the latter clear their dues to IPPs and PSUs....
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Discoms on the ventilator, how long?
The power distribution companies [discoms] are the core of the electricity supply, transmission and distribution chain in the country. Mostly owned and controlled by state governments, the discoms source power from independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] etc besides their own generating stations. Yet, these have been in the news for all the wrong reasons in particular, increasing losses, galloping debt and rising dues to IPPs/PSUs etc. During 2015-16, the combined loss of all discoms was about Rs 52,000 crore even as their debt had reached a colossal about Rs 400,000 crore. Under an unprecedented financial restructuring packages [FRP] orchestrated by the Centre, the state governments took over 75% of this debt...
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Corona pushes discoms to the brink
Given the nature of the crisis, all concerned states should promptly release funds from their budgets to enable discoms to clear all outstanding dues This has meant the destruction of nearly 40% of the total electricity demand. ————————————————————- Even as corona has triggered widespread devastation, a major casualty is the power sector. Following the nation-wide lockdown announced by prime minister Narendra Modi on March 24—this was an absolute must given the hyper-contagious nature of the virus and an overarching need to preempt community transmission—most industries and businesses, including the Railways (passenger segment), have downed their shutters. This has meant the destruction of nearly 40% of the total electricity demand. All consumers, be it industries, shops and establishments, households, farmers, etc, fulfil their...
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Corona pushes discoms to the brink
Even as Corona has triggered widespread devastation, a major casualty is the power sector. Following the nation-wide lock-down announced by the Prime Minister, Narendra Modi on March 24, 2020 [this was an absolute must given the hyper-contagious nature of the virus and an overarching need to pre-empt community transmission], most of the industries and businesses besides Railways [passenger segment] have downed their shutters. This has meant complete destruction of nearly 40% of the total electricity demand. All consumers – be it industries, shops and establishments, households, farmers etc – buy their electricity requirement from the power distribution companies [discoms] [earlier known as state electricity boards (SEBs)]. Mostly owned and controlled by state governments they in turn, source power from independent...
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Powerless discoms
The house must be set in order, else this will have catastrophic consequences for power producers, banks, States and Modi’s plans to supply electricity to every household Even as there are incessant promises from the ruling establishment of electrifying all villages in the country and making power available to each and every household for maximum duration in a day, the most crucial wheel required for making this happen has got stuck. And the irony is that the political brass is only paying lip service to the urgent need for extricating it. The reference here is to the power distribution companies (discoms) — mostly owned and controlled by State Governments which procure electricity from the independent power producers (IPPs), Public Sector...
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Discoms – a 4th bail-out package in the offing
Even as there is incessant talk from top echelons in the ruling establishment of electrifying all villages in the country and making power available to each and every household for maximum duration in a day, the most crucial wheel required for making this happen and which must run smoothly at the desired pace has got stuck. The irony is that the political brass is only paying lip service to the urgent need for extricating it. The reference here is to the power distribution companies [discoms] – mostly owned and controlled by state governments which procure electricity from the independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC], Damodar Valley Corporation [DVC] etc besides their own...
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