The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a Reforms-based and Results-linked, Revamped Distribution Sector Scheme, on June 30, 2021.
Broad Objective
The scheme seeks to improve the operational efficiencies and financial sustainability of all discoms/power departments excluding private sector discoms, by providing conditional financial assistance to discoms for strengthening of supply infrastructure.
Eligibility
The 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. Implementation of the scheme would be based on the action plan worked out for each state rather than a “one-size-fits-all” approach.
Outlay
The scheme will have an outlay of Rs.3,03,758 crore with an estimated GBS (gross budgetary support) of Rs.97,631 crore from the Central government.
Subsuming existing schemes
It is proposed that the currently ongoing approved projects under IPDS, DDUGJY, along with PMDP-2015 for the UTs of Jammu & Kashmir (J&K) and Ladakh, would be subsumed in this scheme, and the resultant savings of their GBS (estimated at Rs. 17,000 crore) would be part of the total outlay of the Revamped Distribution Sector Scheme under the existing terms and conditions, till March 31, 2022.
The funds under these schemes would be available for the identified projects under IPDS and for the approved ongoing projects under PMDP for the UTs of J&K and Ladakh under IPDS and DDUGJY till 31 March, 2023.
Tenure
The scheme would be available till the year 2025-26, which is up to March 31, 2026.
Nodal agencies
REC and PFC have been nominated as nodal agencies for facilitating implementation of the Scheme.
Detailed Objectives
The detailed objectives of the Revamped Distribution Sector Scheme are:
- Reduction of AT&C losses to pan-India levels of 12-15 per cent by FY25
- Reduction of ACS-ARR gap to zero by FY25
- Developing institutional capabilities for modern discoms
- Improvement in the quality, reliability, and affordability of power supply to consumers through a financially sustainable and operationally efficient power distribution sector
Technical Details
Mode of discom appraisal
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, corporate governance, etc. Discoms have to score a minimum of 60 per cent of 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.
Focus on farm sector
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. Separation of around 10,000 agriculture feeders will be taken up with a total outlay of Rs.20,000 crore.
This Scheme converges with PM-KUSUM scheme, which aims to solarize all feeders, and provide avenues for additional income to farmers.
Smart metering
A key feature of the scheme is to empower consumers by way of prepaid smart metering, to be implemented in PPP mode.
While 25 crore smart prepaid meters are planned to be installed during the scheme tenure (up to March 31, 2026), priority will be given to:
- all Electricity Divisions of 500 AMRUT cities, with AT&C losses exceeding 15 per cent
- all Union Territories
- MSMEs and all other Industrial and Commercial consumers
- all government offices at Block level and above
- other areas with high losses
It is proposed to install approximately 10 crore prepaid Smart Meters by December, 2023 in the first phase.
Along with 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.
Smart metering for farm sector
As agricultural electricity connections are intrinsically scattered and remotely located, agricultural connections would be covered only through feeder meters.
Leveraging AI
Artificial Intelligence (AI) 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 integration and for other predictive analysis. This would contribute a great deal towards enhancing operational efficiency and financial sustainability of the discoms.
Special Category States
All Special Category states including the seven northeastern states, Himachal Pradesh, Uttarakhand and the UTs of J&K, Ladakh, A&N Islands and Lakshadweep, will be treated as “Special Category” states.
Grant for smart metering
For prepaid smart metering, grant of Rs.900 or 15 per cent of the cost per-consumer meter worked out for the whole project, whichever is lower, shall be available for those outside the “Special Category” states. For “Special Category” States, the corresponding grant would be Rs.1,350 or 22.5 per cent of the cost per consumer, whichever is lower.
Other financial assistance
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 discoms in “Special Category” states, maximum financial assistance will be 90 per cent of the approved cost.
Additional incentive for smart metering
In addition to the grants discussed above, discoms can also avail of an additional special incentive of 50 per cent of the aforementioned grants if they install the targeted number of smart meters by December 2023.
