Credit line pre-conditions: Discoms need to digitise billing, install smart prepaid meters

The government has asked electricity distribution companies to digitise their bills collection system and install smart prepaid meters for billing efficiency, laying down pre-conditions for release of Rs 90,000 crore credit line to fund-starved discoms.

Besides, the discoms would also provide facility to consumers to make self-assessment of power usage by sending pictures of meters or readings through SMSes.

These are among the pre-conditions for sanction and release of first tranche of the loans to be disbursed by Power Finance Corporation (PFC) and REC Ltd under the Rs 90,000 crore liquidity package announced by Finance Minister Nirmala Sitharaman lastweek.

The funding would be done in two tranches of Rs 45,000 crore each.

The discoms are also mandated to reduce the gap between cost of power supply and revenue realised, and also bring down aggregate technical and commercial losses for disbursal of second tranche of the loans.

A source on the condition of anyonimity said "the PFC board has approved the pre-conditions for release of two tranches of the loans to discoms on May 16".

The source said the clauses ofdigitisation of bill collections and use of smart prepaid meters are provided to improve billing efficiency of discoms which have been cash strapped and incurring losses.

Earlier this month, State-run Energy Efficiency ServicesLtd (EESL) had said that it enableddiscoms in generating around 95 per cent of billing efficiency by using smart meters and 15-20 per cent average increase in monthly revenue per consumer during the lockdown to fight COVID-19.

The government had imposed lockdown on March 25.

The EESL, a PSU under the Ministry of Power, Government of India, is the designated agency to implement the smart metering programme in India.

EESL has installed about 12 lakh smart meters in Uttar Pradesh, Haryana, NDMC New Delhi and Bihar so far.

With the help of smart meters, discoms in these states have been able to handle their operations smoothly in the time of crisis, the EESL had said.

The pre-conditions for getting loan under the package provides that discoms would enable digital payments of electricity bills and also enable self-assessment by consumers.

Under self assessments, discoms shall make provisionfor consumerto send meter reading by taking picture ofthe meter or SMStofacilitate provisional billing.

The pre-conditions also provide that the billsshall be settled and accounted once the meter is read andthe amountspaid by consumers shall be set off.

It also mandates to install smart prepaidorprepaid metersingovernment departments or attached offices for regular payment of electricity dues in future.

The discoms shall use the dues/subsidy paid bythe state governments to repay outstanding loan to REC and PFC.

Among the pre-conditions for disbursal of second tranche of the loan, the source said the discoms shallgive plan to reduce gap between average cost of supply (ACS) and average revenue realised (ARR); and to bring down aggregate technical and commercial (AT&T) losses in next three to four years.

The plan shall be endorsed by state governments in consultation with Ministryof Power.

The loans under the package will be co-funded by PFC and REC in equal proportion. The discoms shall submit an unconditional
and irrevocable state guarantee