Revamped Distribution Sector Scheme | 01 Jul 2021

Why in News

Recently, the Cabinet Committee on Economic Affairs has approved a Reforms-based and Results-linked, Revamped Distribution Sector Scheme worth Rs. 3.03 trillion wherein the Centre’s share will be Rs. 97,631 crore.

  • It aims to improve the operational efficiencies and financial sustainability of discoms (excluding Private Sector DISCOMs).

Key Points

  • About:
    • It will provide conditional financial assistance to strengthen the supply infrastructure of discoms (power distribution companies).
      • The financial assistance will be based on meeting pre-qualifying criteria and upon achievement of basic minimum benchmarks.
    • All the existing power sector reforms schemes such as Integrated Power Development Scheme, Deen Dayal Upadhyaya Gram Jyoti Yojana, and Pradhan Mantri Sahaj Bijli Har Ghar Yojana will be merged into this umbrella program.
    • The scheme will be available till 2025-26.
  • Implementation:
    • It would be based on the action plan worked out for each state rather than a ‘one-size-fits-all’ approach.
  • Nodal Agencies:
    • Rural Electrification Corporation and Power Finance Corporation.
  • Components:
    • Consumer Meters and System Meters:
      • The scheme involves a compulsory smart metering ecosystem across the distribution sector—starting from electricity feeders to the consumer level, including in about 250 million households.
      • It is proposed to install approximately 10 crore prepaid Smart Meters by December, 2023 in the first phase.
    • Feeder Segregation:
      • Scheme also focuses on funding for feeder segregation for unsegregated feeders, which would enable solarization under the PM-KUSUM Scheme.
      • Solarization of feeders will lead to cheap/free day time power for irrigation and additional income for the farmers.
    • Modernization of Distribution system in Urban Areas:
      • Supervisory Control and Data Acquisition (SCADA) in all urban areas.
    • Rural and Urban area System strengthening.
  • Special Category States:
    • North-Eastern State of Sikkim and States/Union Territories of Jammu & Kashmir, Ladakh, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands, and Lakshadweep will be treated as Special Category States.
  • Objectives:
    • Reduction of AT&C losses (operational losses due to inefficient power system) to pan-India levels of 12-15% by 2024-25.
    • Reduction of cost-revenue gap to zero by 2024-25.
    • Developing Institutional Capabilities for Modern DISCOMs.
  • Related Schemes:
    • Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya): To ensure electrification of all willing households in the country in rural as well as urban areas.
    • Integrated Power Development Scheme (IPDS): The scheme provides for (a) strengthening of sub-transmission and distribution networks in urban areas; (b) metering of distribution transformers/feeders/consumers in urban areas; and (c) IT enablement of distribution sector and strengthening of distribution network.
    • Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY): The rural electrification scheme provides for (a) separation of agriculture and non-agriculture feeders; (b) strengthening and augmentation of sub-transmission and distribution infrastructure in rural areas including metering at distribution transformers, feeders and consumers end.
    • GARV (Grameen Vidyutikaran) App: To monitor transparency in implementation of the electrification schemes, Grameen Vidyut Abhiyanta (GVAs) have been appointed by the government to report progress through the GARV app.
    • Ujwal Discom Assurance Yojana (UDAY): For operational and financial turnaround of Discoms.
    • ‘4 Es’ in the Revised Tariff Policy: The 4Es include Electricity for all, Efficiency to ensure affordable tariffs, Environment for a sustainable future, Ease of doing business to attract investments and ensure financial viability.

Source: PIB