Revamped distribution sector scheme positive for State Discoms, implementation is key: ICRA

The reforms-based and results-linked, Revamped Distribution Sector Scheme, with an overall outlay of ₹3.03 lakh crore over the period of next five years till FY25-26, is a positive development for the sector.

This is inclusive of budgetary grant/support of ₹97,631 crore.

The Cabinet approved scheme envisages turning around the finances of state-owned Discoms by a reduction in losses through operational improvements. However, timely implementation by State governments and Discoms will remain critical, says ICRA.

Sabyasachi Majumdar, Senior Vice-President & Group Head- Corporate ratings, ICRA, says, “The scheme seeks to improve the operational efficiencies through smart metering & upgradation of distribution infrastructure, including the segregation of agriculture feeders and system strengthening, in order to enable state owned distribution utilities to curtail the Aggregate technical and commercial losses (AT&C).”

“The scheme targets AT&C losses at 12-15 per cent by FY25-26 as against current levels of 21-22 per cent. Every one per cent reduction in AT&C loss level will result in a cost reduction/savings for Discoms.”