Power distribution could land Rs 3-lakh crore reforms scheme today

Finance minister Nirmala Sitharaman is likely to unveil a Rs 3-lakh crore reforms scheme for the power distribution sector when she gives her Budget speech on Monday, a senior official told ET.

The scheme is likely to have a grant component of Rs 1.02 lakh crore, with the remaining to be funded by states and financial institutions, said the official, who did not wish to be named. The proposed five-year programme will have two major components –implementation of smart prepaid meters and discoms loss reduction trajectory. The government is likely to advocate implementation and operation of prepaid smart meters through private partnerships.

“The power distribution companies will have to progressively keep improving their performance as agreed under loss reduction trajectory to get the allocations under the scheme. A viable electricity distribution sector is the key focus of all the government programmes now,” the official cited earlier said. With the proposed scheme, the central government would try to club improvement in discoms’ financial viability with infrastructure, he said.

The loss reduction targets would be set state-wise and money will be disbursed gradually when they are achieved. While the prepaid smart metering would help reduce losses, an omnibus infrastructure component would allow states to choose their area of focus for distribution reforms. “Under the scheme, the states would have the flexibility to utilise the money toward infrastructure areas of their choice, but they need to ensure that ultimately the financial and operational losses come down,” the official said.

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