Power discom reform: Centre to float mega tender for smart meters

With 21 states now agreeing to go along with the Ujjwal Discoms Assurance Yojana (UDAY), the scheme to rescue the finances of electricity distribution companies (discoms), the Union ministry of power will do a mega tender for procuring 'smart meters' for these states.

It is in discussion with the states and the industry on how to go about this. Sources said under the draft service model, the winning company would develop, own and operate the area with smart last-mile power distribution & management infrastructure.

"To reduce the cost, the government will issue bulk tenders. The contractor would bear the cost and the state would repay in the form of equated monthly instalments. To incentivise the private contractor, the government would follow a leasing finance model and the rate of interest would be included in the cost," said an official, requesting anonymity.

Major domestic and global companies are likely to participate, the government thinks. A meeting to finalise the tender would take place next month, after the Union Budget presentation, said an official.

Piyush Goyal, the minister, has been vocal on the need to install smart meters at household levels, to track energy usage and reduce power wastage. "We have asked the meter manufacturers to design a multi-tasking smart meter to display power consumption at home in real-time, giving details of usage of every appliance and point using electricity," he'd said earlier this month.

As there is no package or funding under the UDAY programme, the Union government will be providing no funds for the meters. The UDAY reform plan, apart from clearing the books of financially stressed discoms, also emphasises on operational efficiency and reduction in transmission and commercial losses of each state, to 15 per cent from the current level by 2018-19. It also aims to improve 'last-mile' transmission and distribution, reducing the difference between average revenue realisation and the average cost of procurement to zero by 2018-19. Also, the new rate policy mandates use of smart meters above 200 units of consumption.

The state-owned discoms which sign on for UDAY would have their future borrowing linked to efficiency parameters.

Earlier, a mega tender to mass-procure electrical equipment for states had failed due to lack of interest from the latter. It was shelved in July last year. State governments' resistance to follow a uniform norm suggested by the Centre forced the power ministry to withdraw. Under the scheme, after the selection of vendors and price discovery, the fund was to be released to states to purchase the equipment. The states have asked that the budgetary allocation be made to them for procuring.

This time, however, the Centre is confident that as the financing is by the contractor and payment by the states, there would be no argument on the over-arching role of the Centre, said officials.