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New Delhi, Apr 19 () The Union Cabinet is likely to approve next week a package for discoms reeling under revenue loss due to lower power demand amid the coronavirus lockdown, including setting up of an alternative investment fund to pay off their dues towards electricity generation companies, a source said. "The Cabinet in the coming week can approve a package for power distribution utilities (discoms) which are under stress due to lower demand and cash crunch," the source said. "The package may include creating an alternate investment fund to pay off dues on behalf of the discoms to gencos. The discoms may be charged nominal interest rate and administrative expenses on that," he added. The package may also include steps like directions to the state and central power regulators to reduce electricity traiff, the source sai. The payment of dues would help distribution companies (discoms) to increase their electricity load (supplies) and ensure 24X7 uninterrupted power supply. According to government data, discoms owe Rs 92,602 crore to power generation companies (gencos) as of February this year. A report by industry body CII had said discoms are likely to suffer a net revenue loss of around Rs 30,000 crore and liquidity crunch of about Rs 50,000 crore due to the coronavirus-induced nationwide lockdown. In its report released on Friday, CII had suggested host of measures like easy credit facility for discoms (from PFC and REC) to pay off its dues to gencos, lower tariff especially for industrial and commercial consumers and deferral of indirect taxes like electricity duty and coal cess. It said the power sector, one of the essential services under the lockdown till May 3, is battling the twin issues of demand and liquidity compression. Latest data from Power System Operation Corporation Ltd (POSOCO) indicated that total demand per week between March 23 and April 12 was 18 BU (billion units), compared to 23 BU during the week of March 9-15 (before 'Janata Curfew' and lockdown) -- a 25-28 per cent reduction in demand. Further extension of the lockdown could result in additional demand compression of 15 to 20 BU, implying a net revenue loss of Rs 25,000 to Rs 30,000 crore for the discoms, it had said. This will further increase the liquidity crunch to Rs 45,000 to 50,000 crore, in addition to the Rs 90,000 crore dues pending by the discoms to generating companies pre-lockdown. Earlier in the week, Renewable Energy Secretary Anand Kumar had said, "We are planning to create an alternative investment fund that will help to give load and financial support to discoms and clear the due to be paid to developers and generators. Our effort is to release maximum due payments from discoms to the power generators," "We want to make sure that our power supply and renewable power are protected and not compromised. We tried to clear all the financial dues of the generators and developers to enhance the capital available with them," Kumar had said during a webinar. KKS ABM

Cabinet likely to okay package for power discoms reeling under revenue loss in lockdown

New Delhi, Mar 29 () Power producers' total outstanding dues owed by distribution firms rose nearly 32 per cent to Rs 88,311 crore in January 2020 over the same month previous year, reflecting stress in the sector.Distribution companies (discoms) owed a total of Rs 67,012 crore to power generation companies in January 2019, according to portal PRAA (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators).The portal was launched in May 2018 to bring in transparency in power purchase transactions between the generators and discoms.In January 2020, the total overdue amount, which was not cleared even after 60 days of grace period offered by generators, stood at Rs 76,192 crore as against Rs 51,453 crore in the same month of the preceding year. According to the latest data on the portal, outstanding dues in January has decreased over the preceding month. In December 2019, the total dues of discoms stood at Rs 86,948 crore.However, the overdue amount in January increased over the preceding month, from Rs 75,930 crore in December 2019.Power producers give 60 days to discoms for paying bills for the supply of electricity. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.In order to give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1, 2019. Under this mechanism, discoms are required to open letters of credit for getting power supply.The central government has given three months moratorium to discoms for paying dues to power generating companies (gencos) in view of lockdown till April 14 to contain COVID-19 across the country. The government has also waived off the penal charges for late payment of dues in the directive issued earlier this week.Discoms in Rajasthan, Uttar Pradesh, Jammu &amp; Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu account for the major portion of dues to power gencos, the data showed.Overdues of independent power producers amount to 25.94 per cent of the total overdue of Rs 76,192 crore of discoms in January. The proportion of PSU gencos in the overdue was 39 per cent.Among the central public sector power generators, the NTPC alone has an overdue amount of Rs 11,007.50 crore on discoms, followed by NLC India at Rs 4,731.13 crore, Damodar Valley Corporation at Rs 4,614.49 crore, NHPC at Rs 2,548.85 crore and THDC India at Rs 2,129.53 crore.Among private generators, discoms owe the highest overdue of 3,421.68 crore to RKMP (RKM Powergen Pvt Ltd) followed by Adani Power at Rs 3,201.68 crore, Bajaj Group-owned Lalitpur Power Generation Company Ltd at Rs 2,212.66 crore and GMR at Rs 1,930.16 crore.The overdue of non-conventional energy producers like solar and wind, stood at Rs 6,618.20 crore in January. KKS KKS BALBAL

Discoms' outstanding dues to power gencos rise nearly 32 pc to Rs 88,311 cr in Jan

New Delhi, Feb 16 () Power producers' total outstanding dues owed by distribution firms jumped nearly 50 per cent to Rs 88,177 crore in December 2019 over the same month previous year, reflecting stress in the sector.Distribution companies (discoms) owed a total of Rs 59,015 crore to power generation companies in December 2018, according to portal PRAA (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators).The portal was launched in May 2018 to bring in transparency in power purchase transactions between the generators and discoms.In December 2019, the total overdue amount, which was not cleared even after 60 days of grace period offered by generators, stood at Rs 78,174 crore as against Rs 44,464 crore in the same month of the preceding year.Power producers give 60 days to discoms for paying bills for the supply of electricity. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.In order to give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1, 2019. Under this mechanism, discoms are required to open letters of credit for getting power supply.According to the latest data on the portal, outstanding dues in December has also increased over the preceding month. In November 2019, total outstanding dues on discoms stood at Rs 82,414 crore.The overdue amount in November has also increased over the preceding month. The total overdue amount was Rs 73,175 crore in November 2019.Discoms in Rajasthan, Uttar Pradesh, Jammu &amp; Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu account for the major portion of dues to power gencos, the data showed.Overdues of independent power producers amount to 25.45 per cent of the total overdue of Rs 78,174 crore on discoms in December.Among the central public sector power generators, NTPC alone has an overdue amount of Rs 15,695.65 crore on discoms, followed by NLC India at Rs 5,010.69 crore, NHPC at Rs 3,165.09 crore, THDC India at Rs 2,136.30 crore and Damodar Valley Corporation at Rs 822.09 crore.Among private generators, discoms owe the highest overdue of Rs 3,201.68 crore to Adani Power, followed by Bajaj Group-owned Lalitpur Power Generation Company Ltd at Rs 2,212.66 crore and GMR at Rs 1,930.16 crore.The overdue of non-conventional energy producers like solar and wind, stood at Rs 6,739.47 crore in December. KKS BAL

Discoms' outstanding dues to power gencos rise nearly 50 pc to Rs 88,177 cr in Dec

New Delhi, The Government has proposed to free both <keyword id="913456" type="COMPANY" weightage="20" keywordseo="power-producers">power producers</keyword> and consumers from continuing with contracted obligation once the tenure of a power purchase agreement expires. The move is expected to provide flexibility to both procurers (mainly <keyword id="53091" type="COMPANY" weightage="20" keywordseo="discoms">Discoms</keyword>) and generators (<keyword id="98684" type="PERSON" weightage="20" keywordseo="power-projects">power projects</keyword>) to look for <keyword id="10462072" type="UNKNOWN" weightage="20" keywordseo="meaning-contracts-post-expiry">meaning contracts post expiry</keyword> of a PPA, one where discoms can get the option to buy cheaper power available in the market while generators could look at new consumers either under <keyword id="10462074" type="UNKNOWN" weightage="20" keywordseo="long-term-contract">long term contract</keyword> or through price discovery on exchanges. The changes have been brought out by <keyword id="10462076" type="COMPANY" weightage="20" keywordseo="the-power-ministry-through-draft-proposals">the power ministry through draft proposals</keyword> on which is it seeking <keyword id="10462075" type="UNKNOWN" weightage="20" keywordseo="stakeholders-comments">stakeholders comments</keyword> before regulations could be finalised. The stakeholders have been asked to submit their comments suggestions by December 24, 2020. In its proposal, the ministry has said that states with long-term PPAs with the interstate central generating stations, whose tariff is determined by the Commission, and which are due to expire in the future, can choose to give up the contracted power after the completion of the PPA tenure of 25 years. Such a mechanism could be availed by the states procuring relatively costlier power from the central generating stations. Also, states looking to convert their long term PPA into shorter term agreements or look to buy power from exchanges to meet exigencies could also relinquish PPA after expiry of its tenure. <keyword id="6375040" type="UNKNOWN" weightage="20" keywordseo="power-ministry">Power ministry</keyword> officials said that the proposed guidelines would also help in making power generation more efficient as generators knowing that their contracts could be rescinded would strive to make their projects more competitive. Also, with PPAs being freed up, such surplus power would be available for deficit states at competitive price. Under the proposed regulations, the first right of refusal would test with discoms meaning contracted power will be freed only with the consent of discoms. Also, discoms looking to end PPAs would serve at least three month notice to generators to help them prepare for the situation. SEE ALSO: <a href="https://www.businessinsider.in/business/news/ikea-india-cfo-says-she-still-has-3500-crore-to-be-spent-in-india-the-pandemic-has-changed-targets-but-not-the-investment-plan/articleshow/79790938.cms">INTERVIEW: Ikea CFO says she still has ₹3,500 crore to be spent in India⁠— the pandemic has changed targets but not the investment plan</a> <a href="https://www.businessinsider.in/science/health/news/india-will-produce-300-million-doses-of-the-russian-sputnik-v-covid-19-vaccine-next-year/articleshow/79795341.cms">India will produce 300 million doses of the Russian Sputnik V COVID-19 vaccine next year</a> <a href="https://www.businessinsider.in/stock-market/news/how-to-check-mrs-bectors-food-specialities-ipo-allotment-status-online/articleshow/79808672.cms">Mrs Bectors Food Specialities IPO allotment: Here’s how to check share allotment status</a>

Government to offer flexibility to discoms to end long term power contracts

New Delhi, Jan 5 () Power producers' total outstanding dues owed by distribution companies increased around 45 per cent to Rs 81,085 crore in November 2019 over the same month previous year, reflecting stress in the sector.
 Distribution companies (discoms) owed a total of Rs 54,834 crore to power generation companies in November 2018, according to portal PRAA (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators).
 The portal was launched in May 2018 to bring in transparency in power purchase transactions between generators and discoms.
 In November 2019, the total overdue amount, which was not cleared even after 60 days of grace period offered by generators, stood at Rs 71,782 crore as against Rs 41,503 crore in the same month of the preceding year.
 Power producers give 60 days to discoms for paying bills for the supply of electricity. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.
 In order to give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1. Under this mechanism, discoms are required to open letters of credit for getting power supply.
 According to the latest data on the portal, outstanding dues in November has increased over the preceding month. In October 2019, total outstanding dues on discoms stood at Rs 80,635 crore.
 The overdue amount in November has also increased over the preceding month. The total overdue amount was Rs 70,477 crore in October 2019.
Discoms in Rajasthan, Jammu &amp; Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu account for the major portion of dues to power gencos, taking a longer duration of up to 943 days to make payments, the data showed.
 Among major states, Andhra Pradesh tops the list with 943 days to make payments, followed by Rajasthan (942 days), Bihar (942 days), Haryana (940 days), Tamil Nadu (938 days), Madhya Pradesh (927 days) and Telangana (920 days).
 Delhi takes 969 days to make payments to power gencos.
 Overdues of independent power producers amount to over 26 per cent of the total overdue of Rs 71,782 crore on discoms in November 2019.
 Among the central public sector power generators, NTPC alone has an overdue amount of Rs 12,483.16 crore on discoms, followed by NLC India at Rs 4,380.22 crore, NHPC at Rs 3,165.11 crore, THDC India at Rs 2,078.30 crore and Damodar Valley Corporation at Rs 936.59 crore.
 Among private generators, discoms owe the highest overdue of Rs 3,201.68 crore to Adani Power, followed by Bajaj Group-owned Lalitpur Power Generation Company Ltd at Rs 2,212.66 crore and GMR at Rs 1,930.16 crore. KKS ABM

Discoms' outstanding dues to power gencos rise 45 pc to Rs 81,085 cr in Nov

New Delhi, Dec 15 () Power producers' total outstanding dues owed by distribution companies rose around 48 per cent to Rs 81,010 crore in October 2019 over the same month last year, reflecting stress in the sector.
 Distribution companies (discoms) owed a total of Rs 54,654 crore to power generation companies in October 2018, according to portal PRAA (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators).
 The portal was launched in May 2018 to bring in transparency in power purchase transactions between generators and discoms.
 In October this year, the total overdue amount, which was not cleared even after 60 days of grace period offered by generators, stood at Rs 67,143 crore as against Rs 39,338 crore in the same month last year.
 Power producers give 60 days to discoms for paying bills for the supply of electricity. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.
 In order to give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1. Under this mechanism, discoms are required to open letters of credit for getting power supply.
 According to the latest data on the portal, outstanding dues in October has decreased over the preceding month. In September 2019, total outstanding dues on discoms stood at Rs 82,548 crore.
 However, the overdue amount in October has increased over preceding month of September. The total overdue amount was Rs 65,155 crore in September.
 The September 2019 figures of dues and overdues have been revised upwards from Rs 69,558 crore and Rs 52,408 crore provisional numbers released last month on the portal.
 Discoms in Rajasthan, Jammu &amp; Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu account for the major portion of dues to power gencos, taking a longer duration of up to 913 days to make payments, the data showed.
 Among major states, Andhra Pradesh tops the list with 913 days to make payments, followed by Rajasthan (912 days), Bihar (912 days), Haryana (910 days), Tamil Nadu (908 days), Madhya Pradesh (897 days) and Telangana (890 days) in that order.
 Delhi, a smaller state, takes 939 days to make payments to power gencos.
 Overdues of independent power producers amount to over 22.46 per cent of the total overdue of Rs 67,143 crore on discoms.
 Among the central public sector power generators, NTPC alone has an overdue amount of Rs 12,271.75 crore on discoms, followed by NLC India at Rs 4,413.94 crore, NHPC at Rs 3,178.42 crore, THDC India at Rs 1,883.54 crore and Damodar Valley Corporation at Rs 870.92 crore.
 Among private generators, discoms owe the highest overdue of Rs 3,201.68 crore to Adani Power, followed by Bajaj Group-owned Lalitpur Power Generation Company Ltd at Rs 2,212.66 crore and GMR at Rs 1,930.16 crore. KKS HRS

Discoms' outstanding dues to power gencos rise 48 pc to Rs 81,010 crore in October

New Delhi, Apr 17 () Industry body CII on Friday said discoms are likely to suffer a net revenue loss of around Rs 30,000 crore and liquidity crunch of about Rs 50,000 crore due to the coronavirus-induced nationwide lockdown. According to government data, the discoms owe Rs 92,602 crore to Gencos as of February, 2020. In its report released on Friday, the CII has suggested host of measures like easy credit facility for discoms (from PFC and REC) to pay off its dues to Gencos, lower tariff especially for industrial and commercial consumers and deferral of indirect taxes like electricity duty, coal cess etc. According to the report, power sector, one of the essential services under the lockdown till May 3, is battling the twin issues of demand and liquidity compression. Latest data from Power System Operation Corporation Limited (POSOCO) indicates that total demand per week between March 23 and April 12 was 18 BU (billion units), compared to 23 BU during the week of March 9-15 (before Janata Curfew and lockdown), 25-28 per cent reduction in demand. The further extension of the lockdown could result in additional demand compression of 15 to 20 BU, implying a net revenue loss of Rs 25,000 to Rs 30,000 crores for the discoms, it said This will further increase the liquidity crunch to Rs 45,000 to 50,000 crores, in addition to the Rs 90,000 crore dues pending by the discoms to generating companies' pre-lockdown, it said. "Recent experience suggests that a financial restructuring package without insistence on structural reforms leads to temporary alleviation of the problem in the sector followed by eventual recurrence of the core problems of liquidity. We therefore propose that the post COVID-era is the right time to undertake an ambitious overhaul of the sector...", said Chandrajit Banerjee, Director General, CII in the report. The report highlighted that the thermal generators could face additional Rs 20,000 crore to 25,000 crore cash crunch. Renewable energy generators have been bearing the brunt of power curtailments, overdue payments by state discoms of Rs 10,000 crores and policy uncertainty, it said. Further, 20 to 25 per cent of debt of renewable energy projects comes from overseas lenders, to whom the 3-month moratorium by RBI will not apply, it pointed out. Transmission companies are facing delays in on-going projects as lockdown has affected the movement of manpower and supply resulting in delays and the manufacturing sector employing 20 lakh people across over 4000 SMEs could be at stake, it said. In such a scenario, it becomes increasingly important to inject liquidity in the sector to ensure continuous supply, power generation viability and robust industrial recovery post lockdown, it suggested. CII's white paper 'Sustaining India's Power and Renewable Energy Sector analyses impact of COVID-19 on the sector with the demand reduction coupled with delays in collections. Shot term measures include ensuring short-term liquidity management like creation of special line of credit through PFC/REC to discoms. Secondly, the government can allow deferral of payments of indirect taxes and for mitigating impact of delays in on-going renewable projects it suggested an increase in tariff. Under medium-term reforms measures, it suggested to develop a roadmap to implement cost-reflective tariffs and rationalized tariff structure with lower commercial and industrial tariffs. The central government could invest directly through a central holding company. It also asked to develop a central government-led funding scheme for accelerating the rollout of smart metering (investment of Rs 1.5 lakh crores over 4 to 5 years) and adoption of digital solutions for improving operational decision-making among discoms. It said that the liquidity crunch of discoms is likely to worsen during and post the lockdown, and the gap may grow by 20–25 percent. The sector is likely to require significant transition financing to mitigate the impact. The central power finance institutions (PFC, REC, and IREDA) should consider lending directly to discoms or to discount the discoms' outstanding dues using funds borrowed from banks or from their regular sources, it suggested. KKS DRRDRR

Discoms to suffer Rs 30K cr revenue loss, face Rs 50K cr liquidity crunch due to lockdown: CII

New Delhi, Dec 3 () Union Power Minister R K Singh on Tuesday said in the Rajya Sabha that state government departments owe about Rs 41,700 crore to power distribution companies and asked states to ensure payments are made on time.
 The minister also informed that aggregate technical and commercial (AT&amp;C) losses have come down to about 18 per cent from 22 per cent.
 "As a result of UDAY, some improvement has happened. The losses in AT&amp;C have come down from 22 per cent to about 18 per cent. So there has been some progress, though the progress could have been better," Singh said.
 The minister said the Centre would work together with states to bring down losses of power discoms, which are with state governments.
 He said most of the discoms are filing revision in tariff on time to take care of inflation and risng input cost.
 "Barring one or two discoms, most of them have filed on time. Although in many cases, revision has not taken place," he said.
 The minister attributed the losses in discoms to theft, inefficiencies in billing and collection by distribution companies, and government departments not paying their dues on time.
 "Total dues against government departments of states is Rs 41,700 crore and loss (of discoms) in 2018-19 is Rs 27,000 crore. I have written to states, they must make sure that the government departments pay on time," Singh said.
 He said the government announces subsidy for various categories of people and this subsidy should be paid upfront to distribution companies.
 However, he said, the states do not follow this rule and pay partial subsidy amount.
 To reduce losses of discoms, the minister said states have been asked to adopt smart pre-paid metres in the next three years, and informed that 7.5 lakh such metres have been installed in Uttar Pradesh.
 State government departments should also install smart pre-paid metres, he said. MJH RVK

State govt departments owe Rs 41,700 cr to discoms: Power Minister

New Delhi, Apr 3 () Power sector regulator CERC on Friday ordered reduction in late payment surcharge (LPS) payable by discoms to generation and transmission companies 1 per cent per month from the earlier 1.5 per cent for delayed clearance of dues amid coronavirus lockdown.Power generation companies (gencos) and transmission utilities (transcos) charge LPS from discoms for delayed payments of bills beyond 45 days."If any delayed payment by the distribution companies to the generating companies and inter-state transmission licensees beyond 45 days from the date of the presentation of the bills falls between 24.03.2020 and 30.06.2020, the concerned distribution companies shall make the payment with LPS at the reduced rate of 12 per cent per annum that translates into 1 per cent per month," the Central Electricity Regulatory Commission (CERC) said in a suo motu order on Friday.Earlier on March 28, the Ministry of Power had issued directions to the CERC to provide a moratorium of three months to discoms to make payments to generating companies and transmission licencees and not to levy penal rates of LPS.The ministry had also asked state governments to issue similar directions to state electricity regulatory commissions.The ministry had pointed out in its statement that due to the lockdown, consumers are unable to pay their dues to the discoms.This has affected the liquidity position of the discoms thereby impairing their ability to pay to the generating and transmission companies, it had said.In this context, Power Minister R K Singh has approved significant relief measures for power sector, it had stated.The ministry took a slew of measures in view of lockdown till April 14 to contain COVID-19.In the 2019 CERC Tariff Regulations, the rate of LPS which is applicable beyond 45 days from the date of presentation of the bill is 1.5 per cent per month (which translates to 18 per cent per annum).This order also clarifies that if the period of 45 days beyond the due date of the presentation of the bill by the generating companies or inter-state transmission licencees, as the case may be, falls before 24.03.2020 or after 30.06.2020, the concerned distribution company shall be liable to pay the LPS as per CERC's 2019 Tariff Regulations i.e. 18 per cent per annum.The cut in LPS will be applicable on gencos and transmission utilities which have signed cost-plus basis agreements with discoms. In these cases tariff is decided by power regulator on basis of estimates submitted by the gencos.In case of power purchase agreements signed on tariff-based competitive bidding, the reduction in LPF for payment delayed beyond 45 days during March 24 to June 30, will be claimed under in the force majeure clauses.Commenting on the order, Pratik Agarwal, Managing Director, Sterlite Power, said, "As the nation grapples with the impact of Covid-19, the CERC order is a welcome move as it announces no moratorium on monthly tariff payments due to gencos and transcos. This will ensure smooth functioning of the entire power sector and avoid liquidity issues at this important hour where grid security is of utmost importance.""The reduction in late payment surcharge from 1.5 per cent per month to 1 per cent per month will provide much needed relief to discoms. We are thankful to CERC for considering the financial sustainability of the entire power sector value chain and bring out a balanced order during these trying times." KKS MKJ

CERC cuts late payment surcharge on discom dues to gencos, transcos

More than a month has passed since the cabinet gave its approval to the Ujwal DISCOM Assurance Yojana or <keyword id="9140" type="PERSON" weightage="80" keywordseo="Uday">UDAY</keyword> for short. The scheme has certain salient features that will help India's growing power sector face one of its most challenging problems. 
 The scheme comes forth at a time when DISCOMs have seen accumulated losses soaring to 3.8 lakh Crores and an outstanding debt of approximately Rs. 4.3 lakh Crore (as on March 2015). Just to put these numbers in perspective, the outstanding debt is close to twice the defence budget of the country at present. A question that naturally arises is what made things come to such a pass? The fact is DISCOMs have been facing problems for a long time now. However, the financial problem that DISCOMs have been facing became acute in the past 4-5 years as they began funding their operational losses by taking on more debt. Debt restructuring for DISCOMs have happened in the past but this time, it appears the government is keen on finding a long-term solution to the problem. Debt at present comes with <keyword id="6371181" type="UNKNOWN" weightage="80" keywordseo="interest-rates">interest rates</keyword> hovering as high as 15%. This high interest cost has trapped DISCOMs in a vicious debt cycle. Due to this the banks, have seen their NPA's rise that is a cause of concern for both the banks and the RBI. 
 
The scheme thus comes at an opportune time and tries to resolve these legacy issues of the Power sector in the next 2-3 years by a four-pronged approach. 
 
First, it seeks to improve the operational efficiencies of the power DISCOMs. It is proposed to be done through proper metering, up-gradation to energy efficient modes like usage of LED's the prices for which have already seen a tremendous downward spiral. Prices of LEDs have seen a tremendous downward spiral due to the removal of supply-side bottlenecks and with that economies of scale bringing prices further down. The measures to improve operational efficiency are done with a view to reducing the average AT&amp;C losses from the present 22 percent to a target of 15 percent by 2018-19. 
 
Second, the scheme proposes a reduction in the cost of power. It is a step that would require improvements across the upstream side of value chain right from the fuel supply to improvements in generation technologies and betterment in the existing and addition of new transmission line infrastructure. The government is keen to bring in improvements in these. In the previous year, the power sector has seen the highest production growth in coal sector as well as the highest capacity addition in the generation and highest ever transmission line additions. 
 
Third, the scheme seeks to reduce the interest cost of DISCOMs. It is to be done by asking states to take over 75 percent of the debt of DISCOMs as on 30 September 2015. The 75 percent debt is in line with the recommendations of the Fourteenth Finance Commission. The scheme proposes it to be done in 2 Phases- the first 50 percent to be taken over in 2015-16 and the rest 25 percent to be taken over by 2016-17. It is expected that this will reduce the interest cost by an estimated 6-7 percent thus disrupting the debt trap in which the DISCOMs seem to be stuck at present. 
 Finally, the scheme seeks to enforce financial discipline in DISCOMs by aligning them with states' finances. The initial years will see the fiscal space remaining the same for states even when they take over the debts. It is to be done by ensuring that for the initial two years evaluation of debt in the <keyword id="6365485" type="UNKNOWN" weightage="80" keywordseo="fiscal-deficit">fiscal deficit</keyword> does not take place. Also, the scheme proposes to make the states accountable by giving them the power to take over and fund at least 50 percent of the future losses (if any) of the DISCOMs in a graded manner. 
 
The scheme is optional and has so far seen has seen enrolment by nine states according to the official Twitter handle of the Power Minister. The scheme overall seems well thought through and is not just a restructuring package but a major reform that will help secure power for all citizens. In the process, it is hoped it will forever change the dynamics of DISCOMs in the country. Other sectors need to bring in such ‘reforms’ to make the states and well as India globally competitive. 
 
The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at <a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a> and tweets @kautiliya)

You Searched For "discoms" and got 10 results

Cabinet likely to okay package for power discoms reeling under revenue loss in lockdown

PTI

Discoms' outstanding dues to power gencos rise nearly 32 pc to Rs 88,311 cr in Jan

PTI

Discoms' outstanding dues to power gencos rise nearly 50 pc to Rs 88,177 cr in Dec

PTI

Government to offer flexibility to discoms to end long term power contracts

IANS

Discoms' outstanding dues to power gencos rise 45 pc to Rs 81,085 cr in Nov

PTI

Discoms' outstanding dues to power gencos rise 48 pc to Rs 81,010 crore in October

PTI

Discoms to suffer Rs 30K cr revenue loss, face Rs 50K cr liquidity crunch due to lockdown: CII

PTI

State govt departments owe Rs 41,700 cr to discoms: Power Minister

PTI

CERC cuts late payment surcharge on discom dues to gencos, transcos

PTI

Power Sector Reforms: The story of UDAY so far

Amit Kapoor

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