Cost-revenue gap of discoms drop 68% as government links funding to performance – Times of India

NEW DELHI: The gap between the cost of power and revenue realisation of distribution companies (discoms) narrowed 68% in 2021-22 from 2020-21 as the power ministry linked funding and supply access to time-bound improvement in systemic efficiency.
Data of 56 discoms, accounting for more than 96% of distributed power, show the average cost-revenue gap (on subsidy received basis, excluding regulatory income and UDAY grant, declining from 69 paise per unit in 2020-21 to 22 paise in 2021-22.
The reforms push also resulted in line losses, an euphemism for theft and other systemic inefficiencies and called aggregate technical and commercial loss, from at 21-22% to 17%, indicating better metering and billing of power supplied.
Improvements in these two parameters will lead to improved financial health of discoms, allowing them to purchase power for ensuring 24X7 supply and maintain or upgrade networks. Financially healthier discoms is important for preparing the power market for post-energy transition phase.
The improvements are a result a number of steps the ministry has taken in the last few years. The first step towards making every paise given to discoms count was taken by revising the prudential norms for lending to discoms in September 2021.
The revised norms barred loss-making discoms from accessing funds from lenders until the respective state governments gave its seal of approval on an action plan for reducing losses within a specific timeframe.
There were other regulations that were brought in to regulate funding under other heads for discoms unless they had a state-approved plan to improve various parameters to pre-decided levels within a given timeline and approved by the respective state government.
In October 2021, the ministry brought in regulations providing for mandatory energy accounting and energy auditing for all discoms. In June 2022, late payment surcharge rules, saying that access to power from the grid or exchanges will be cut unless discoms [ay their bills promptly.
But it was not all stick. The ministry extended financing under various schemes for undertaking loss reduction measures.

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