Revamp of India’s distribution sector launched

Improvement in the quality and reliability of India’s distribution supply is in the sights of a new ‘reforms based and results linked’ scheme.

The five-year programme launched by the Ministry of Power aims to reduce the aggregated technical and commercial losses across India to a level of 12-15% and to close to zero the gap between the average cost of supply and the aggregate revenue requirement by 2025.

The cost is estimated at Rs3.04 trillion (US$40.8 billion), of which Rs976.3 billion (US$13.1 billion) will receive budgetary support.

Under the scheme the distribution companies are required to prepare an action plan to strengthen their distribution system and improve its performance by way of various reform measures to improve their operational efficiency and financial viability as well as the quality and reliability of supply to consumers.

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Elements of the plan must include an analysis of the reasons for losses and a revenue gap and a detailing of the proposed steps to reduce them along with an accompanying work plan.

A key driver for the plan appears to be the national rollout of the prepaid smart metering along with the accompanying data management and analysis, billing and other associated tools.

Other infrastructure improvements envisaged include the segregation of agricultural feeders, replacement of old overhead conductor lines, distribution automation and SCADA and distribution management systems.

The plans, which must be approved by the state government and filed with central government, will then be subject to evaluation by a monitoring committee to qualify for funding support.

Funding for the prepaid smart metering will be prioritised to the electricity divisions of the 500 cities of the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) infrastructure development programme with losses exceeding 15%, followed by the union territories, business and industrial customers and government offices before expanding to the remaining consumers.

Responsibility for implementing the scheme is with REC Ltd (formerly the Rural Electrification Corporation) and the Power Finance Corporation.

Though no compulsory timeline has been set out, clearly for the distribution companies to qualify for any funding they will need to complete an action plan.