Centre to tighten grant terms, make it difficult for states to provide free electricity for political gain

The union ministry of power has decided to tighten the conditions for grants given to the states under the Revamped Distribution Sector Scheme

Going ahead, it is going to be difficult to dish out free electricity for political gain. According to sources, the union ministry of power has decided to tighten the conditions for grants given to the states under the Revamped Distribution Sector Scheme (RDSS).

Under RDSS, the central government gives grants to states for expenses such as installing prepaid smart meters (that automatically disconnect power supply when the prepaid balance is over), modernisation of the power distribution infrastructure, etc. According to the sources, Power Minister RK Singh had recently called a meeting, at which he directed that grants under the scheme should be given only when state governments fulfil five conditions.

The first condition is that the applicable power tariff must be up to date. Second, the tariffs should reflect the costs, i.e., power tariffs should be fixed according to the cost of electricity for power distribution companies.

Third, the subsidy should be calculated on a per unit basis and properly accounted for. Fourth, the number of units supplied to the subsidised categories should be duly captured, and subsidy bills raised to the state government. And fifth, smart pre-paid meters must be installed in government offices.

Sources said that the minister has directed the Rural Electrification Corporation (REC) and the Power Finance Corporation (PFC) to certify that energy supplied to the subsidised categories of consumers has been duly captured and bills raised to the state government. The REC and PFC will have to submit these details for FY 2022-23.

"The long-term objective of this entire exercise is to reform the power sector. The sector should be viable for investors, so that new investments can come in. The push for semiconductors will require a large amount of reliable electricity in the coming days. For this, production needs to be increased, which is possible only when there is reform in the entire sector," sources added.