Power distribution companies (discoms) in Union Territories will be privatised, Finance Minister Nirmala Sitharaman said on May 16.
She made the announcement as part of tranche four of the Rs 20 lakh crore stimulus package, adding that the move will address the sub-optimal performance of power discoms.
“This will lead to better service to consumers and improvement in operational and financial efficiency in distribution. It will also provide a model for emulation by other utilities across the country,” the finance minister said.
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For this, a tariff policy reform will be undertaken, addressing three main areas: consumer rights, promote industry and sector sustainability.
The reforms will include the following:
- Consumer rights
- Discom inefficiencies not to burden consumers
- Standards of service and associated penalties for discoms
- Discoms to ensure adequate power, load shedding to be penalised
- Promote industry
- Progressive reduction in cross subsidies
- Time bound grant of open access
- Generation and transmission project developers to be selected competitively
- Sustainability of sector
- No regulatory assets
- Timely payment for generation companies
- Direct Benefit Transfer for subsidy;
- Smart prepaid meters
The finance minister announced the fourth tranche of announcements aimed at creating structural reforms in coal, minerals, defence production, airspace management, airports, Maintenance, Repair and Overhaul (MRO) in aviation, power distribution companies in UTs, space and atomic energy.