Cabinet approves revamped Distribution Sector Scheme

Cabinet approves revamped Distribution Sector Scheme

New Delhi, July 1, 2021

The Union Cabinet on Wednesday approved a revamped Distribution Sector Scheme that seeks to improve the operational efficiencies and financial sustainability of all DISCOMs and Power Departments, excluding private sector DISCOMs.

Under the scheme, conditional financial assistance will be given to DISCOMs for strengthening supply infrastructure, an official press release said.

"The assistance will be based on meeting pre-qualifying criteria as well as upon achievement of basic minimum benchmarks based on the 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," it said.

The scheme will have an outlay of Rs 3,03,758 crore with an estimated gross budgetary support (GBS) from the Central Government of Rs 97,631 crore. The ongoing approved projects under the schemes of IPDS, DDUGJY along with PMDP-2015 for the Union Territories of Jammu & Kashmir (J&K) and Ladakh would be subsumed in this scheme and the savings of their GBS (approximately 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 the Integrated Power Development Scheme (IPDS) and the approved ongoing projects under Prime Minister’s Development Programme (PMDP) for the Union Territories of J&K and Ladakh under IPDS and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) till March 31, 2023.

The Revamped Distribution Sector Scheme aims to improve operational efficiencies and financial sustainability, by providing result-linked financial assistance to DISCOMs for strengthening supply infrastructure based on meeting pre-qualifying criteria and achieving basic minimum benchmarks.

The scheme would be available till the year 2025-26, the release said.

The Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) have been nominated as nodal agencies for facilitating its implementation.

It aims at reduction of AT&C losses to pan-India levels of 12-15% by 2024-25 as also reduction of ACS-ARR gap to zero by 2024-25.

It proposes to develop institutional capabilities for modern DISCOMs; improvement in the quality, reliability, and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector.

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% 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.

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. The work of separation of 10,000 agriculture feeders would be taken up through an outlay of almost Rs 20,000 crore, which would be highly beneficial to the farmers who would get access to dedicated agriculture feeders providing them reliable and quality power.

This scheme converges with the Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM-KUSUM) Scheme, which aims to solarize all feeders and provide avenues for additional income to farmers.

A key feature is to enable consumer empowerment by way of prepaid Smart metering to be implemented in the Public-Private-Partnership (PPP) mode. Smart meters would allow consumers to monitor their electricity consumption on a routine basis instead of a monthly basis, which can help them in the usage of electricity as per their own needs and terms of the resources available, the release added.

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