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Power ministry urges switch to prepaid smart meters as govt's discom dues rise

Apart from the operational inefficiencies, mounting electricity dues of the government departments, including Central and state governments due to delayed and inadequate payments for electricity usage also cause cash flow distress in discoms, the Union power ministry said.Premium
Apart from the operational inefficiencies, mounting electricity dues of the government departments, including Central and state governments due to delayed and inadequate payments for electricity usage also cause cash flow distress in discoms, the Union power ministry said.

  • Prepaid smart metering in all government departments would go a long way in ensuring the commitment of the government in bringing discoms back on the path of financial sustainability, the power ministry said in a statement

NEW DELHI: As part of India’s push to leverage electricity smart meters to reduce distribution losses, the Union power ministry has advised Central government offices to switch over to prepaid smart meters on priority.

This comes against the backdrop of discoms being traditionally been the weakest link in the electricity value chain, plagued by low collections, rise in power purchase cost, inadequate tariff hikes and subsidy disbursement, and mounting dues from government departments.

“Apart from the operational inefficiencies that cause financial losses, mounting electricity dues of the government departments, including Central and state governments; urban and rural local bodies; and government boards and corporations due to delayed and inadequate payments for electricity usage also causes cash flow distress in discoms," the Union power ministry said in statement.

“The interest burden on the additional working capital availed by discoms to tide over the shortfalls further creates an inflationary pressure on their costs, thereby placing further stress on their viability. Estimates obtained from the States suggest the outstanding Government department dues to be 48,664 crore at the end of FY2020-21, a value that is a colossal 9% of the annual power sector turnover," the statement added.

India is rolling out the world’s largest electricity smart metering programme to reduce power theft and help the country’s struggling distribution utilities become more efficient. The marquee 3.03 trillion power discom reform scheme also has a compulsory smart metering ecosystem component.

“State departments can emulate similar mechanisms to promote pre-payment of electricity," the statement said.

Creating a smart meter architecture minimizes human intervention in metering, billing and collection process and helps in reducing theft by identifying loss pockets. It requires a two-way communication network, control centre equipment and software applications that enable near real-time gathering and transfer of energy usage information.

“This follows a clarification issued by the Ministry of Finance enabling all Central ministries and Central departments to make advance payments for pre-paid metered electricity without insisting on any bank guarantees, while at the same time ensuring proper accounting arrangements," the statement said.

With the narrowing of India’s gap between the cost of electricity bought (average cost of supply, or ACS) and supplied (average realizable revenue, or ARR) to 28 paise per unit in 2019-20 led to a fall in discom losses by more than a third to 38,000 crore from 61,360 crore in FY19, according to government data.

“Prepaid smart metering in all government departments would not only go a long way in ensuring the commitment of the government in bringing discoms back on the path of financial sustainability, promotion of energy efficiency but would also serve as a model for emulation by states for defining similar such mechanisms that support prepayment of the electricity dues by their own departments," the statement added.

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