The Union ministry of power has issued an advisory to all Union government ministries to direct organizations under their administrative control to switch over to prepaid energy meters on priority, a government release said.
The release added that ministries have also been asked to issue all-enabling orders in this regard. This follows a clarification issued by the Ministry of Finance enabling all Central Ministries and Central Departments to make advance payments for pre-paid metered electricity without insisting on any bank guarantees, while at the same time ensuring proper accounting arrangements.
How it helps
Prepaid smart metering in all government departments would not only go a long way in ensuring the commitment of the government in bringing discoms back on the path of financial sustainability, promotion of energy efficiency but would also serve as a model for emulation by States for defining similar such mechanisms that support prepayment of the electricity dues by their own departments, the release added.
Health of discoms
Discoms are often termed as the most important, but the weakest link in the power sector value chain, as their poor financial health at the bottom of the value chain has far reaching negative impacts upstream.
Apart from the operational inefficiencies that cause financial losses, delayed and inadequate payments for electricity usage by government organizations also causes cash flow distress in discoms. The interest burden on the additional working capital availed by discoms to tide over the shortfalls further creates an inflationary pressure on their costs, thereby placing further stress on their viability.
Estimates suggest the outstanding government department dues to be Rs.48,664 crore, as of March 31, 2021. This represents a colossal 9 per ecnt of the power sector’s annual turnover, the release said.
Reforms scheme
To improve the operational efficiency and financial sustainability of the power distribution sector, the Centre has approved the Revamped Distribution Sector Scheme – A Reforms-Based and Results-Linked Scheme.
The scheme seeks to transform the existing discoms into making them operationally efficient and financially sustainable. One of the path-breaking interventions under the scheme is the plan to install prepaid smart meters to all electricity consumers except agricultural consumers in a phased manner. Almost half of the scheme’s outlay has been committed to smart prepaid meters.
(Featured photograph for illustration only)
