Union Cabinet Approves Rs 3.03-lakh Crore Scheme for Power Discoms

The Cabinet Committee on Economic Affairs (CCEA) on June 30, approved a reform-based result-linked power distribution scheme worth Rs 3.03 lakh crore that has been in the works for five years. The scheme has been approved with an inclusive Rs 97,000 crore central outlay.

The Reform-Based Result-Linked Power Distribution Scheme which was announced in Budget earlier this year by Finance Minister Nirmala Sitharaman was brought to the table again on Monday as part of the stimulus package to aid in the efforts towards the post-second wave of COVID-19 situation, to boost the economy.

Power and New & Renewable Energy Minister R K Singh stated that these funds would be given to power distribution companies (DISCOMs) to strengthen their system and infrastructure.

The scheme is to be used to improve the operational capabilities and make the whole process more financially stable for all DISCOMs and power departments, excluding those in the private sector. It aims to achieve this by providing result-linked financial assistance to DISCOMs based on them meeting pre-qualifying criteria as well as the basic-minimum benchmarks set for the scheme.

This scheme will carry an outlay of Rs 3,03 lakh crore with an approximate GBS from the Central Government of Rs 97,631 crore. It will be made available effective till the year 2025-2026. The Power Finance Corporation (PFC) and Rural Electrification Corporation Ltd (REC) have been made the nodal agencies for this scheme and will oversee the facilitation and execution of it.

The main objective of the scheme is to reduce Aggregate Technical & Commercial (AT&C) losses to pan-India levels of 12-15% by 2024-2025; reduce the Average Cost of Supply (ACS) and Average Revenue Realization (ARR) gap to zero by 2024-2025; develop Institutional capabilities of DISCOMs and improve the quality, reliability, and affordability of power supply to consumers through via a financially sustainable and operationally efficient Distribution Sector.