Finance Minister Announces ₹3.03 Trillion for Upgrading DISCOMs

The latest government program plans to incorporate 250 million smart meters, 10,000 feeders, and 400,000 km of low-tension overhead lines


The Union Finance Minister Nirmala Sitharaman announced the ‘Economic Relief from Pandemic’ package and declared several sops for power distribution companies (DISCOMs), including ₹3.03 trillion (~$40.82 billion) outlay for reform-based result-linked power distribution program.

Earlier this year, Sitharaman had presented the 2021-22 budget in the parliament amid challenging times affected by the Covid-19 pandemic.

In her budget speech, Sitharaman had mentioned that the viability of DISCOMs was “a serious concern”. A revamped reforms-based result-linked power distribution sector program was expected to be launched with an outlay of ₹3.05 trillion (~$41.92 billion) over five years.

According to the minister, the program would assist DISCOMs in infrastructure creation, including prepaid smart meters, feeder separation, and up-gradation of systems tied to financial improvements.

The initiative encourages state-specific intervention in place of a one-size-fits-all drive. The participation is subject to pre-qualification criteria, including publication of audited financial reports, upfront liquidation of state government’s dues or subsidy to DISCOMS, and non-creation of additional regulatory assets.

The program has plans to incorporate 250 million smart meters, 10,000 feeders, and 400,000 km of low-tension overhead lines.

The program would merge the ongoing works of the Integrated Power Development Scheme (IPDS), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), and the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA).

Of the total ₹3.03 trillion (~$40.82 billion) outlay, the central share would be ₹976.31 billion (~$13.15 billion). Meanwhile, the states have already been allowed additional borrowing for four years up to 0.5% of gross state domestic product annually – ₹1.05 trillion (~$14.14 billion) for 2021-22, subject to specified power sector reforms.

Last year, NTPC Limited, the Power Grid Corporation of India Limited (PGCIL), REC Limited, and PFC formed a joint venture (JV) for providing a common backend infrastructure facility (CBIF) to DISCOMs for faster roll-out of smart meters in the country. Each of these companies were to infuse ₹1.5 billion (~$20.04 million) into the JV. The development of a CBIF is to facilitate the roll-out of smart meters by offering a plug-and-play architecture with standardized, integrated, and scalable backend infrastructure.

Mercom reported earlier on how smart meters can unlock a slew of capabilities that the utilities in India badly need – increase billing efficiency, remote billing, automatic outage reporting, flexibility with time-of-use tariffs, and add new revenue streams.

In 2019, the government announced plans to replace all existing electricity meters with smart prepaid meters. The process of switching over was to be completed in three years. The program is implemented by Energy Efficiency Services Limited (EESL), which has installed over 1.32 million smart meters in Uttar Pradesh, New Delhi, Haryana, and Bihar.

Image Credit: Ministry of Finance via Wikimedia Commons


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