Cabinet Okays Rs 3.04 Lakh Cr Revamped Distribution Sector Scheme

In a significant development, the Union Cabinet has approved the Rs 3.04 lakh crore Reforms-based and Results-linked, Revamped Distribution Sector Scheme, which was announced in Budget this year.

The scheme sought to improve the operational efficiencies and financial sustainability of all Discoms/ power departments excluding private sector Discoms by providing conditional financial assistance to them for strengthening of supply infrastructure.

In this regard, Power Ministry said that, “assistance will be based on meeting pre-qualifying criteria as well as upon achievement of basic minimum benchmarks by the Discom evaluated on the basis of agreed evaluation framework tied to financial improvements.”

Also, the scheme would be implemented based on the action plan worked out for each state rather than a “one-size-fits-all” approach, it further said.

Moreover, the scheme will have an outlay of Rs 3,03,758 crore with an estimated GBS from Central Government of Rs 97,631 crore.

It is proposed that the currently ongoing approved projects under the Schemes of IPDS, DDUGJY along with PMDP-2015 for the Union Territories of Jammu & Kashmir (J&K) and Ladakh would be subsumed in this Scheme, and the savings of their GBS (approx Rs 17,000 crore) would be part of the total outlay of the Revamped Distribution Sector Scheme under the existing terms and conditions till their sunset on March 31, 2022.

Further, the funds under these schemes would be available for the identified projects under IPDS and for the approved ongoing projects under Prime Minister’s Development Program (PMDP) for the Union Territories of J&K and Ladakh under IPDS and DDUGJY till March 31, 2023.

The Revamped Distribution Sector Scheme aims to improve operational efficiencies and financial sustainability, by providing result-linked financial assistance to Discoms for strengthening of supply infrastructure based on meeting pre-qualifying criteria and achieving basic minimum benchmarks.

The scheme would be available till the year 2025-26, and both REC and PFC have been nominated as nodal agencies for facilitating implementation of the scheme.

The objective of the scheme is to reduce AT&C losses to pan-India levels of 12-15% and ACS-ARR gap to zero by 2024-25; develop institutional capabilities for modern Discoms; and improvement in the quality, reliability, and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector.