One more chance for discoms to sit

New delhi date. 01 February 2021, Monday

Finance Minister Nirmala Sitaram has provided one more opportunity to the country's power distribution companies (DISCOMs) to come out of weakness. The finance minister has announced an improvement plan of Rs 2,06,8 crore in the budget to allow the discoms to sit.

The finance minister has devised a scheme for discoms in conjunction with the results this year. Discoms under financial strain have been given a further five years to sit. Earlier attempts were made to seat the discoms through the Uday scheme, but the scheme has not been particularly successful.

According to the scheme announced in the budget, discoms have been given a period of five years to set up structures, install prepaid smart meters, feeder separation and upgrade existing systems. Over the next five years, Discoms will have to improve its finances and operations.

There are also plans to remove the monopoly of private or government power suppliers in most parts of the country and provide consumers with a choice, thus creating competition in the power distribution sector.

The previous Uday Yojana which was started in 2012 was completed in the financial year 2020. During these five years, most of the states have failed to reduce the losses of their discoms.

Due to inefficient structure, many states have not been able to meet the target of reducing discom's aggregate technical and commercial losses below 15 per cent. The deficit is currently at 2.50 per cent. This figure is based on the available data of each discoms at the end of the financial year 2020.

It may be mentioned here that in July last year, the government had announced a relief of Rs 1.11 trillion for discoms. This support was provided to power generating companies to pay off arrears and to reduce losses.