In a serious bid to improve the ailing power distribution sector and revive loss-making discoms, the Finance Minister Nirmala Sitharaman on Monday in the annual budget has proposed an outlay of Rs 3.05 lakh crore over 5 years. This is meant for a revamped, reforms based and result linked new power distribution scheme to achieve the goal of '24X7 Power for All.'
FM said consumers will have alternatives to choose the distribution company for enhancing competitiveness. The government is proposing to create a framework to give consumers alternatives to choose from more than one power distribution company. The move is aimed at offering competition at operator level and more choice to consumers.
This comes at a time when the distribution companies are by and large owned by the Centre and state governments barring few exceptions. India has 139 GW of installed capacity and 1.41 lakh circuit km of transmission lines added, and additional 2.8 crore households connected in the past 6 years. However, experts argue that power distribution continues to be a weak link.
KPMG Partner & National Head (Energy &Natural Resources) Anish De said as the discoms operate as regional monopolies in their respective areas of supply, promoting competition will bring in private players and improve operational efficiencies which will benefit consumers by providing them a choice for supplier selection. ‘’ To improve the sustainability of financially ailing discoms, FM has announced Rs 3.05 lakh crore for revamped discom performance improvement scheme which will be linked to financial improvement and will include expenditure on infrastructure including prepaid smart metering, feeder segregation and up gradation of systems,’’ he added.
This apart, De said FM has announced monetisation of PowerGrid Corporations’ transmission assets worth Rs 7,000 crore through InvIT. ‘’ It will be important and first of kind step in the power sector which will help monetize operational assets and channelise freed up capital into greenfield power sector projects,’’ he noted.
Moreover, FM has also said that a comprehensive National Hydrogen Energy Mission 2021-22 will be launched. She has also proposed Rs 1,500 crore to Indian Renewable Energy Development Agency and Rs 1,000 crore to Solar Energy Corporation of India.