Unjustified Load-Shedding Will Attract Penalties, R K Singh Warns DISCOMs

States will not get loans from REC or PFC if they fail to follow the law

January 19, 2024


Union Minister for Power and New & Renewable Energy R K Singh has warned distribution companies (DISCOM) that unjustified load-shedding will be penalized going forward, calling the practice of cutting off electricity supply to different regions “an insult to the people.”

“We have said that consumers have rights to 24*7 electricity and that if there is any gratuitous load-shedding, then penalties have to be levied, and compensation has to be given,” he said at a review meeting of the power sector.

Singh urged DISCOMs to add capacity, sign power purchase agreements, and increase efficiency. “In 2030, our peak demand is going to go up from 243 GW today to 366 GW. Our established capacity has to go up to 900 GW from about 427 GW today,” he said.

Singh also pointed out that while billing efficiency has gone up, collection efficiency remains stuck at 92.7%.

Another area of concern, according to the minister, was the gap between the Average Cost of Supply (ACS) and the Average Revenue Realized (ARR), which increased by ₹0.15 (~$0.0018) to around ₹0.45 (~$0.0054).

The minister asked the states to adhere to laws and rules to ensure the viability of the power sector. “Otherwise, you will not get any power from the Centre, you will not get any loan from PFC (Power Finance Corporation) or REC (Rural Electrification Corporation). If there is any instance of tariff not being up-to-date, tariff not being cost-reflective, or subsidy not being paid, requisite action under the law will be taken.”

Union power secretary Pankaj Agarwal highlighted that some DISCOMs were still lacking in taking up loss reduction works under the Revamped Distribution Sector program. He said that if a DISCOM fails to fully utilize the budgetary support released to it, the unutilized funds will be given to other “progressive” DISCOMs.

The program was introduced to help DISCOMs improve their operational efficiencies and financial sustainability by providing result-linked financial assistance to DISCOMs who achieve the basic minimum benchmarks and meet the pre-qualifying criteria.

As of December last year, DISCOMs owed power generators ₹655.95 billion (~$7.89 billion) in total dues for the monthly billing cycle.

Last month, the Ministry of Power proposed regulating short-term and general network access (GNA) for DISCOMs that fail to clear their dues even after two and a half months.

Earlier this month, the ministry said Aggregate Technical and Commercial losses of DISCOMs have reduced from 27% in 2015-16 to 15.41%.