Cabinet Call: Private funds to steer discom bailout

A new bailout scheme for power distribution entities (discoms) approved by the Cabinet on Wednesday hinges a lot on private funds to step up the distribution infrastructure. For the Rs 3-lakh-crore scheme to be implemented in the five years to FY26, the Centre will fork out Rs 97,631 crore, and the balance funds have to harnessed by the discoms via assorted means, including borrowings, but ideally through public-private partnership mode ventures, official sources told FE on condition of anonymity.

Of the funds to be mobilised, as much as Rs 1.5 lakh crore will be used for installation of 25 crore smart pre-paid meters, and these projects are likely to be executed through the PPP route.

Given that the last bid to revive the loss-making, debt-ridden discoms through the so-called UDAY scheme launched in November 2015 failed to achieve the goals after showing some initial promise in inculcating discipline in the discoms’ operations, the Centre has made funding under the new scheme contingent on the discoms committing to undertake structural reforms and infrastructure creation such as feeder separation and smart meters. .

The ides is to address core issues of billing-collection inefficiencies and pilferage efficiently. “Loss-making discoms will not have access to the scheme unless they work out a trajectory for loss reduction and get the respective state government’s approval for the same,” Union power minister RK Singh said.