The Cabinet Committee on Economic Affairs has recently greenlit a Reforms-based and Results-linked, Revamped Distribution Sector Scheme worth Rs. 3.03 trillion, where the central government will contribute Rs. 97,631 crore. The primary aim of this program is to enhance operational efficiencies and ensure financial longevity for discoms (power distribution companies) excluding those in the private sector.
About the Scheme
The newly approved scheme is set to provide conditional financial aid to fortify the supply infrastructure of power distribution companies. This financial assistance will hinge on meeting preliminary qualifying criteria and fulfilling basic minimum benchmarks. It will amalgamate all existing power sector reform schemes such as Integrated Power Development Scheme, Deen Dayal Upadhyaya Gram Jyoti Yojana, and Pradhan Mantri Sahaj Bijli Har Ghar Yojana into one comprehensive umbrella program, applicable until 2025-26.
Scheme Implementation
The implementation of this innovative scheme will follow an action plan tailored for each state, steering clear from a ‘one-size-fits-all’ strategy. Two significant nodal agencies have been identified – the Rural Electrification Corporation and Power Finance Corporation.
Key Components
A critical component of the scheme is the mandatory smart metering ecosystem across the distribution sector which ranges from electricity feeders to consumer level, spanning around 250 million households. The first phase proposes the installation of approximately 10 crore prepaid Smart Meters by December 2023.
The scheme also includes funding provisions for feeder segregation for unsegregated feeders, facilitating solarization under the PM-KUSUM Scheme. Solarization of feeders will allow cheap or free daytime power for irrigation, creating an additional income stream for farmers.
Modernization and Strengthening Measures
Modernization efforts under the scheme include implementing Supervisory Control and Data Acquisition (SCADA) in all urban areas, as well as system strengthening in both urban and rural regions.
Special Category States
Certain regions, including the North-Eastern State of Sikkim and States or Union Territories of Jammu & Kashmir, Ladakh, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands, and Lakshadweep, will be classified as Special Category States.
Scheme Objectives
The primary objectives of this ambitious scheme include reducing AT&C losses (operational losses stemming from an inefficient power system) to pan-India levels of 12-15% by 2024-25; narrowing the cost-revenue gap to zero by 2024-25; and developing Institutional Capabilities for Modern DISCOMs.
Related Schemes
Several related schemes fall under this umbrella, like the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya), Integrated Power Development Scheme (IPDS), Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), the GARV (Grameen Vidyutikaran) App, Ujwal Discom Assurance Yojana (UDAY), and the ‘4 Es’ in the Revised Tariff Policy.
Each scheme plays a significant role in ensuring electrification, strengthening transmission and distribution networks, providing transparent implementation monitoring, operational and financial turnaround of Discoms, and maintaining efficiency and environmental sustainability.
