GoM discusses new scheme for debt restructuring of power discoms

The GoM also held deliberations for drafting the broad contours of the new scheme to be proposed for debt restructuring of distribution utilities

The Group of Ministers (GoM), constituted to look at the viability of electricity distribution utilities, discussed a new reform-based scheme for debt restructuring of discoms by the central government during its fifth meeting on Tuesday.

 

“It was deliberated that the regulatory commissions must issue full cost tariffs, and the state governments may provide subsidies if required. It was deliberated that in order to ensure timely resolution of issues and discourage motivated litigation, needful measures to encourage mediation mechanisms should be brought in the regulations,” the power ministry said in a statement.

 

In view of the gravity of the debt situation, the GoM, headed by Union Power and Housing Affairs Minister Manohar Lal Khattar, also discussed that there was a need to recognise the debt of the distribution utilities as the liability of the state governments, it added.

 

“The key points of discussion included the role that the state governments and the regulators should play for ensuring cost reflective tariff, and for ensuring timely payment of subsidies and government department dues, expediting smart metering works, increasing the use of data analytics to improve power purchase optimisation and demand forecasting,” the ministry said.

 

The GoM also deliberated on drafting broad contours of the new scheme to be proposed for debt restructuring of distribution utilities. During the meeting, the joint secretary (distribution) briefed about the key reasons for continued un-viability of distribution utilities and informed that the high cross subsidy has resulted in expensive cost of manufacturing, affecting their competitiveness. He presented the proposed key reform measures, which have emerged as a result of the deliberations.

 

“Additional secretary, Ministry of Power, also made a presentation on the proposed Electricity (Amendment) Bill, which could create an enabling environment for improving financial viability of utilities, facilitating ease of living & doing business, promoting energy transition, strengthening regulatory framework and optimising distribution network utilisation,” the ministry said.