The tentatively-named Atal Distribution System Improvement Yojana (ADITYA) scheme will help power distribution companies (discoms) pare their losses and effectively monitor electricity consumption, Union power minister R.K. Singh said on Monday at Energyscape, The Mint Energy Conclave 2020 in New Delhi.
The scheme envisages states to approve a roadmap to make discoms viable by switching to prepaid smart meters within three years and also clearing their dues.
The scheme assumes importance as some of the states are recording power distribution losses of as high as 50%. Discoms are the weakest link in the electricity value chain, plagued by low collection, higher power purchase cost, inadequate tariff hikes and subsidy disbursement, and mounting dues from government departments.
The scheme will address one of the biggest challenges in the power sector—the health of electricity retailers— Singh said. It will help spur latent power demand, which is key to making the sector viable. It will also specify a trajectory for loss reduction and contain incentives and disincentives for meeting targets.
States with more than 18% aggregate technical and commercial (AT&C) losses can opt for an infrastructure support reform package that entails choosing an option between running discoms in the public-private partnership (PPP) mode, inducting multiple supply and network franchisees, and working through input-based distribution franchisees.
The previous scheme for loss reduction of discoms, Ujwal Discom Assurance Yojana (UDAY), had helped reduce their collective loss from about 24% to 18% of revenue, Singh said. The scheme worked, but not to the extent the government wanted, he said.
The minister said the government has drafted a package to incentivize loss reduction by the discoms. The ADITYA scheme, set to be one of the most ambitious distribution reform schemes, involves reducing electricity losses to less than 12%.
The ₹2.86 trillion scheme aims to ensure continuous power supply to all residents and it involves adopting models such as privatizing state-run discoms and having multiple supply, network and distribution franchisees.