Union Minister of State for Power and New & Renewable Energy Shri Shripad Yesso Naik, as chairperson of the Group of Ministers, held a virtual meeting here today with Group of Ministers constituted for addressing issues related to viability of distribution utilities. 

Shri A. K Sharma, Energy Minister, Uttar Pradesh, Shri Gottipati Ravi Kumar, Energy Minister, Andhra Pradesh, Shri Pradyuman Singh Tomar, Energy Minister, Madhya Pradesh, Shri V Senthil Balaji, Minister of Electricity, Tamil Nadu, Smt Meghana Deepak Sakore Bordikar, Minister of State for Energy, Maharashtra and Shri Heeralal Nagar, Minister of State for Energy, Rajasthan who are the members of the Group attended the meeting. The meeting was also attended by senior officials from Central and State Government and officials from Power Finance Corporation Ltd.

In his welcome address Energy Minister, Government of Uttar Pradesh, Shri Arvind Kumar Sharma, convenor of the Group, commended the measures taken by the Government of India for improving the operational efficiency and financial viability of the Distribution Utilities. He remarked that pro-active measures by Ministry of Power will have far reaching impact on making country’s distribution sector stronger and healthier. He advocated for adopting and investing in technology in the distribution sector. He emphasised on the need for timely and adequate payment of Government Department Dues and subsidy by the State Governments and effective redressal of consumer grievances.

In his opening remarks, Union Minister highlighted that the financial viability of electricity distribution utilities, or DISCOMs lies at the heart of India’s energy sector and is very critical for the entire value chain. These entities are the lifeline of our electricity supply chain, connecting power generation to millions of homes, businesses, and industries. However, they face significant challenges that affect not only their financial health but also the sustainability of entire Power Sector value chain. He mentioned that year on year gap between the average cost of supply (ACS) and the average revenue realized (ARR) is eroding the financial stability of the Utilities which needs to be brought down. This gap is largely due to under-recovery of costs esp. power purchase costs, non-cost reflective tariffs, distribution losses, etc. He expressed concern about the AT&C losses which are far above the global average of 6–8% and the need to improve it by improving network, adopting new technologies and improving the billing and collection efficiency. He mentioned about the roles that each stakeholder should play in improving the viability of these utilities especially in the context of the investment required to cater to growing energy demand in the country. He further mentioned about the Gujarat DISCOMs and suggested to understand the steps taken by Gujarat distribution utilities to improve their financial performance.  

Energy Minister, Government of Andhra Pradesh, Shri Gottipati Ravi Kumar mentioned about priority being given by the State Government for development of Renewable Energy. He also highlighted the progress made by the State under PM KUSUM and PM Surya Ghar: Muft Bijli Yojana.

Energy Minister, Government of Madhya Pradesh, Shri Pradyuman Singh Tomar emphasised on the need for accurate energy accounting and auditing for reducing line losses and the need to have effective consumer grievance redressal mechanism at each level of Government.

Electricity Minister, Government of Tamil Nadu, Thiru V.Senthil Balaji highlighted the reforms undertaken by the State Government and the role of Smart Metering in improving the revenues of the distribution utilities. 

Minister of State (Energy), Government of Maharashtra, Smt. Meghana Deepak Sakore Bordikar mentioned about the initiative taken by the State under Mukhyamantri Saur Krushi Vahini Yojana which would help in improving quality of supply of power to farmers and reduce power purchase costs for utilities.

 Minister of State (Energy), Government of Rajasthan Shri Heeralal Nagar highlighted the rich renewable energy potential of the State and the projects taken by State under Hybrid Annuity Model for providing low cost day time supply of power for agricultural purposes.

It was agreed that with rich experience of the group, innovative and out of the box solutions will be explored to steer the distribution sector on the path of financial viability. Also, it was agreed to convene further meetings in the member States.

Group of Ministers on Viability of Distribution Utilities

The Constitution of the GoM is as follows:

1. Hon’ble Minister of State for Power and New and Renewable Energy, Govt. of India - Chairman
2. Energy Minister, Uttar Pradesh- member-cum-convenor
3. Energy Minister, Andhra Pradesh- member
4. Energy Minister, Rajasthan- member
5. Energy Minister, Tamil Nadu- member
6. Energy Minister, Madhya Pradesh- member
7. Energy Minister, Maharashtra- member

The Terms of Reference (ToR) for the GoM are as under:

1. Analyze debt scenario in key States
2. Identify parameters that need to be monitored to ensure borrowings are productive
3. Identify States that are in urgent need for liquidity support and design a fiscal discipline program to enable them to avoid a debt trap.
4. Recommend guidelines for investment plan with respect to capital expenditure targeted at overall improvement – ensure adequate technical and financial due-diligence, equity investment by State Government, suitable mechanism for realization through tariff.
5. Suggest measures for improvement in the overall health of the distribution sector to attract further investment from private participants in the value chain

The GoM would submit its report in three months.

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JN/ SK

 

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