Revamped Distribution Sector Scheme

Table of Contents

Revamped Distribution Sector Scheme- Relevance for UPSC Exam

GS Paper 2: Governance, Administration and Challenges- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Revamped Distribution Sector Scheme in News

During ‘Ujjwal Bharat Ujjwal Bhavishya – Power @2047’ Program, Indian Prime Minister launched the Power Sector’s Revamped Distribution Sector Scheme.
He also dedicated and laid the foundation stone of various green energy projects of NTPC.

Revamped Distribution Sector Scheme

About: The flagship Revamped Distribution Sector Scheme is aimed at improving the operational efficiencies and financial sustainability of the DISCOMs and Power Department.
Implementing Ministry: Revamped Distribution Sector Scheme is being implemented under administrative control of Ministry of Power.
Funding: Revamped Distribution Sector Scheme will be implemented with an outlay of over Rs. 3 lakh crore over a period of five years from FY 2021-22.
- The outlay includes an estimated Government Budgetary Support (GBS) of Rs 97,631 Crore.
Components: The Revamped Distribution Sector Scheme has the following components-
- Part A – Financial support for Prepaid Smart Metering & System Metering and up-gradation of the Distribution Infrastructure.
- Part B – Training & Capacity Building and other Enabling & Supporting Activities.

Revamped Distribution Sector Scheme- Key Objectives

The scheme aims to provide financial assistance to DISCOMs for-
- Modernization and strengthening of distribution infrastructure,
- Focussing on the improvement of the reliability and quality of supply to end consumers.
It also aims to improve the operational efficiencies and financial sustainability of all state-sector DISCOMs and Power Departments by reducing-
- The AT&C (Aggregate Technical and Commercial) losses to pan-India levels of 12-15% and
- The ACS-ARR (Average Cost of Supply-Average Revenue Realized) gap to zero by 2024-25.

Key Features of the Revamped Distribution Sector Scheme

Key features of the revamped Distribution Sector Scheme are mentioned below-

Prepaid Smart Metering to be prioritized for
- 500 AMRUT cities, with AT&C Losses > 15%
- All Union Territories
- MSMEs, Industrial and Commercial consumers
- All Government offices at the Block level and above
- Other areas with high losses
Prepaid Smart metering for remaining consumers and areas is proposed to be taken up by the respective DISCOMs in a phased manner.
Prepaid Smart metering and system metering are proposed to be implemented through PPP on TOTEX (CAPEX+OPEX) mode.
Part A of the scheme also provides financial assistance to DISCOMs for-
- Infrastructure creation and
- Undertaking reforms to achieve the desired results towards improvement in operational efficiency and financial sustainability.
Provision of feeder segregation for unsegregated feeders. Thereafter these feeders are to be solarized under KUSUM – leading to cheap/ free daytime power for irrigation.
The pre-qualifying criteria need to be mandatorily met with the DISCOMs before they can be evaluated based on the Result Evaluation Matrix.
- Thereafter, performance based on Result Evaluation Matrix shall form the basis for the release of funds under the scheme.
For Prepaid Smart metering, a grant of Rs 900 or 15% of the cost per consumer meter (whichever is lower), shall be available for “Other than Special Category” States.
- For “Special Category” States, the grant of Rs 1350 or 22.5% of the cost per consumer (whichever is lower) shall be available.
To incentivize the States/UTs to fast-track installation of prepaid Smart Meters by December 2023, an additional incentive of 7.5% of the cost per consumer meter or Rs. 450 (whichever is lower) shall be available.
- For “Special Category” States the additional incentive shall be 11.25% or Rs. 675 per consumer meter (whichever is lower).
For works other than smart metering, maximum financial assistance given to DISCOMs of “Other than Special Category” States will be 60% of the approved cost.
- For the DISCOMs in special category states, the maximum financial assistance will be 90% of the approved cost.