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Include Discom liability while fixing states' borrowing, Minister tells finance panel
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SME Times News Bureau | 29 May, 2020
In a bid to ensure financial
discipline among states, the Power Ministry wants their borrowing limits
under FRBM Act be recalibrated to take into account liabilities of
their Discoms.
In his briefing on the power sector to the 15th
Finance Commission, Power Minister R.K. Singh said there was a need for
the state governments to be also conjointly responsible for the
financial health of their fully owned Discoms.
On the proposal to
link borrowing limits of states to discom liabilities, the minister
said this was based on financial transparency to bring about financially
and managerially responsible behaviour among states with respect to
Discoms.
Singh also highlighted to the Commission the current
disconnect in the structures of the power system between decision-making
by state governments and the financial consequences thereof, which are
borne by the Discoms, leading to losses.
The Commission took note
of the suggestions given by the Power Ministry and gave assurance that
it fully takes into consideration the suggestions of the Ministry in its
deliberations and also in its final report.
The Finance
Commission headed by N. K. Singh on Friday held a detailed meeting with
the Power Ministry on issues relating to reforms in the electricity
sector in states. This was in continuation of the recommendations made
on the power sector by the Finance Commission in its report for the
financial year 2020-2021.
The discussion was a lead-up to the
Commission's next report following announcement of Rs 90,000 crore
liquidity injection for electricity Distribution Companies (DISCOMs) by
the Finance Minister as part of the Rs 20 lakh-crore economic package
announced to combat the disruption from the coronavirus lockdown.
The
power Minister also briefed the Commission about the reforms in the
pipeline for the turnaround of the Discoms. This included the new
tariff policy which is under consideration for approval. Amendments are
also proposed to the Electricity Act of 2003.
Singh informed the
Commission that the old schemes of the Ministry are being amalgamated
into a new scheme for which he requested the Commission for a support of
Rs. 3 lakh crore over a five-year period. This scheme would primarily
focus on steps for reduction of losses, separate feeders for agriculture
and smart prepaid meters.
The 15th Finance Commission in its
report for FY 2020-21 noted that most states have reduced, to some
extent, their aggregate technical and commercial (AT&C) losses and
the difference between average cost of supply and average realizable
revenue (ACS-ARR) after implementation of the Ujwal DISCOM Assurance
Yojana (UDAY) in 2016-17.
However, the progress did not appear
to be sustainable unless systemic issues in the power sector are
suitably addressed. The Minister and the Commission felt that robust and
systemic reforms are required to improve the health of the power
sector.
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