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PM launches discom revamp scheme, asks states to pay power dues

The Revamped Distribution Sector Scheme will have an outlay of over Rs 3 lakh crore over a period of five years from the financial year 2021-22 to FY 2025-26.

July 30, 2022 / 04:41 PM IST
(Representational image)

(Representational image)

Prime Minister Narendra Modi pulled up state governments for not paying dues to power distribution companies (discoms), which has curbed the latter’s ability to invest in additional infrastructure, asking them to make prompt payments and revisit the politics of free power.

Talking at the final event of ‘Ujjwal Bharat, Ujjwal Bhavishya- Power 2047’, PM Modi said that power discoms owe Rs 1 lakh crore to power generation companies. Whereas, states owe Rs 60,000 crore to discoms and another Rs 75,000 crore on account of the various subsidies that states had promised to their citizens. 

“About 2.5 lakh crore rupees of power generation and distribution companies are trapped. Given this situation will the power companies be able to invest in infrastructure and future needs? Will we force the future generations to live in darkness?” Modi said. 

PM Modi requested the states whose dues are pending, to clear them as soon as possible and to introspect why some states have arrears repeatedly. 

“States need to think honestly, why their dues are increasing, despite consumers paying honestly,” PM Modi said. 


Payment delays across the value chain have hurt the power sector. The resolution of payment issues among various stakeholders in India’s power sector may hold the key to meeting the rising electricity demand in the country, according to power sector players and industry experts. 

“With the passage of time a serious disorder has come into our politics. Politics should have the courage, to tell the truth to the public, but we see that some states try to avoid it. 

This strategy may seem like good politics in the short term. But it is like postponing today's truth, today's challenges, for tomorrow, for our children, for our future generations,” the PM said.

He said that the losses in India’s power distribution sector are in double digits, whereas that in the developed nations are in single digits. “This means that we have a lot of wastage of electricity and therefore we have to generate more electricity than we need to meet the electricity demand,” he said. 

The PM launched the Ministry of Power’s flagship Revamped Distribution Sector Scheme (RDSS) which aims at improving the operational efficiencies and financial sustainability of the discoms and state power departments, which was first announced in May. RDSS, which is the second such scheme in two years to support the beleaguered power discom, will have an outlay of over Rs 3 lakh crore over a period of five years from the financial year 2021-22 to FY 2025-26.

It will provide financial assistance to DISCOMs for modernization and strengthening of distribution infrastructure and will focus on improving the reliability and quality of supply to end consumers. The scheme also aims to reduce the aggregate technical and commercial (AT&C) losses to an-India levels of 12-15% and the average cost of supply-average revenue realized (ACS-ARR) gap to zero by 2024-25. 

Talking at the event, the PM said that the energy sector will play a huge role in accelerating India's progress in the next 25 years and will be key to the country’s ability to improve ‘Ease of Doing Business and ‘Ease of Living. 

On July 30, he also launched green energy projects that will support India’s goals toward energy security. The PM laid the foundation stone of the 735 megawatts Nokh Solar Project in Rajasthan, a green hydrogen mobility project in Leh, and Kawas Green Hydrogen Blending with Natural Gas project in Gujarat.
Rachita Prasad heads Moneycontrol’s coverage of conventional and new energy, and infrastructure sectors. Rachita is passionate about energy transition and the global efforts against climate change, with special focus on India. Before joining Moneycontrol, she was an Assistant Editor at The Economic Times, where she wrote for the paper for over a decade and was a host on their podcast. Contact:
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