To Target for Fewer losses and offer Supply choices, New Power Scheme is Introduced in India
The new plan is estimated to contain a plan to diversify power distribution across the country by moving from a mostly state-owned discom system to one where private firms would be allowed franchises to supply electricity to the consumers.
The upcoming Budget is likely to introduce a new scheme directed at the power sector that would restore the NDA government’s earlier plan, UDAY, which had floundered in its attempt to revive the country’s power (discoms) distribution companies.
As per Power Minister Mr. R.K. Singh, UDAY was not a failure. He also suggested that the new set of reforms would be rigorous in its implementation. The project would combine elements of strengthening the distribution system and the trajectory of loss reduction of UDAY. Now it will be conditional, if states follow the trajectory of loss reduction, we will give them the money for powering the system. UDAY envisaged that the development funds would be conditional, but that was never implemented.
The new scheme is also estimated to contain a plan to expand power distribution across the country by moving from a mostly state-owned distribution company system to one where private firms would be allowed franchises to supply electricity to consumers. According to Power Minister, he will come out with a plan whereby the consumer is given a choice, so that they have not one, but multiple supply agencies. So, the distribution company continues to be the owner of the wiring system. But, at the supply end, there will be numerous agencies that will contend. This would ensure contest and better service and would also provide a timely collection of money for the power distribution. It will also bring in the regulations required in the system whereby if the state wants to give subsidies or not. But companies will have to deposit the money upfront with the discom (distributed companies), which has not been happening.
UDAY was launched in 2015 and was aimed at encouraging diseased state power distributed companies and make them operationally and financially effective through various measures, such as minimizing aggregate technical and commercial (AT&C) losses to 15 percent and losses had come down to 18.79 percent. The new scheme aims to achieve this 15 percent of the target. Last December that the counted losses of discoms have nearly doubled in this fiscal. The primary reason for UDAY’s inefficiency in achieving its goals is the failure of discoms to gather the full cost they pay for the power.
