About the scheme

• In July 2021, the government launched a Reforms-based and Results-linked, Revamped Distribution Sector Scheme.  

• The Scheme seeks to improve the operational efficiencies and financial sustainability of all DISCOMs/ Power Departments excluding Private Sector DISCOMs.
• It provides conditional financial assistance to DISCOMs for strengthening of supply infrastructure. 
• The 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 an agreed evaluation framework tied to financial improvements.
• The Scheme has a major focus on improving electricity supply for the farmers and for providing daytime electricity to them through solarization of agricultural feeders.
• A key feature of the Scheme is to enable consumer empowerment by way of prepaid smart metering to be implemented in Public-Private-Partnership (PPP) mode. Smart meters would allow consumers to monitor their electricity consumption on a routine basis instead of monthly basis, which can help them in usage of electricity as per their own needs and in terms of the resources available.
• The Scheme would be available till the year 2025-26. 

Implementation 

• Implementation of the Scheme would be based on the action plan worked out for each state rather than a “one-size-fits-all” approach.

Nodal agencies

• Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) have been nominated as nodal agencies for facilitating implementation of the Scheme.

Scheme Objectives

• Reduction of AT&C (Aggregate Technical & Commercial) losses to pan-India levels of 12-15% by 2024-25.
• Reduction of cost-revenue gap to zero by 2024-25.
• Developing Institutional Capabilities for Modern DISCOMs.
• Improvement in the quality, reliability, and affordability of power supply to consumers through a financially sustainable and operationally efficient Distribution Sector.

Components

• Major components of the scheme includes
  • Prepaid Smart Meters for all consumers except Agricultural consumers
  • Funding for feeder segregation for unsegregated feeders
  • Modernization of Distribution system in urban areas
  • Rural and Urban area System strengthening

Special Category States

• All Special Category States including North-Eastern States of Sikkim and States/Union Territories of Jammu & Kashmir, Ladakh, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands, and Lakshadweep will be treated as Special Category States.
• For Prepaid Smart metering, grant of Rs 900 or 15% of the cost per consumer meter worked out for the whole project, whichever is lower, shall be available for “Other than Special Category” States. For “Special Category” States, the corresponding grant would be Rs 1350 or 22.5% of the cost per consumer, whichever is lower.
• For works other than Smart metering, maximum financial assistance given to DISCOMs of “Other than Special Category” States will be 60% of the approved cost, while for the DISCOMs in Special Category States, the maximum financial assistance will be 90% of the approved cost.

Why in News?

• The Ministry of Power has reviewed the implementation of the Revamped Distribution Sector Scheme. 

Reference:

1. https://pib.gov.in/PressReleasePage.aspx?PRID=1785248