industry

Ministry to review States’ role in Uday


NEW DELHI: The government will take a carrot-and-stick approach to address indiscipline among some power distribution companies in the proposed succession scheme to the Ujwal Discom Assurance Yojana (Uday).

Coupled with other proposed reforms, such as disallowing commercial losses of more than 15% to be passed on in consumer tariffs and deferring of power price hikes by regulators, the government expects to set right the electricity distribution network — the weakest but the most critical link for consumer interface in the power sector.

Finance minister Nirmala Sitharaman, in her budget speech, said the government is examining performance of Uday and would improve it. The government is likely to revise targets and parameters of each state depending on their issues and past performances. There will be funding available as reward to improving states for investment in initiatives such as installation of smart meters, aerial bunch cabling and system upgrade. The present scheme did not have dedicated funds for these measures, a senior government official said.

The power ministry has been allocated nearly Rs 10,200 crore towards schemes such as Integrated Power Development Scheme, Deen Dayal Upadhyaya Gram Jyoti Yojana and strengthening of systems in the budget. The official said the ministry might have to seek more funds for the second phase of Uday.

Uday financial incentives and additional funds towards network upkeep will be available to distribution utilities that meet the targets in the given timeline. The government official said performance of each state is being reviewed. “A micro study will be conducted on Uday trajectory and reasons for non-achievement in some states. There are about 7-8 states that have failed in achieving their targets, upsetting the scheme.”

Uday in its present form envisages reducing debt burden of distribution companies by entrusting 75% of their loans to state governments. The financial parameters included issuing bonds for the remaining 25% debt, reducing commercial losses and gap between cost and supply of power, regular tariff revision. While the operational parameters included metering at feeder level and distribution transformer level, connections to all households, installing smart metering, feeder segregation and distribution of LEDs. Increasing debt and overdues of distribution utilities over the last nine months has drawn criticism to Uday.





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