Union Minister of State for Power and New & Renewable Energy Shri Shripad Yesso Naik chairs the 3rd meeting of Group of Ministers constituted for addressing issues related to viability of distribution utilities in the country
Union Minister of State for Power and New & Renewable Energy, Shri Shripad Yesso Naik, chaired the third meeting of Group of Ministers constituted for addressing issues related to viability of electricity distribution utilities in Lucknow today.
Shri A. K Sharma, Energy Minister, Uttar Pradesh, Shri Gottipati Ravi Kumar, Energy Minister, Andhra Pradesh, Shri Pradyuman Singh Tomar, Energy Minister, Madhya Pradesh, Smt. Meghana Sakore Bordikar, Minister of State for Energy, Maharashtra and Shri Somendra Tomar, Minister of State for Energy, Uttar Pradesh attended the meeting. The meeting was also attended by senior officials from Central Government, State Governments, State Power Utilities of Member States, Power Finance Corporation (PFC) Ltd and REC Ltd.
In his opening remarks, Union Minister of State welcomed Energy Ministers from the Member States and thanked Energy Minister, Uttar Pradesh, for hosting the meeting. He highlighted about the discussions held during the first two meetings of the GoM and the collective efforts required from the member States for improvement of power distribution sector. He highlighted the need for designing a mechanism for financial restructuring of liabilities of distribution utilities, lowering interest burden on utilities, development of storage solutions, facilitating daytime power supply for agriculture to lower the overall power purchase costs and reduce subsidy burdens.
The Minister also highlighted the need for implementing AI and digital innovations and need for ensuring cost-reflective tariffs for financial viability of power sector. He added that implementing these measures shall help utilities improve the financial sustainability. He also emphasized the need for a scheme similar to UDAY.
In his address Energy Minister, Uttar Pradesh thanked the Union Minister of State for having the 3rd meeting of the Group of Ministers in Lucknow. He highlighted the achievements of the State of Uttar Pradesh in the power sector including adoption of RE technologies. He commended that the measures taken by the Government of India will have far reaching impact on making country’s distribution sector stronger and healthier. He emphasised on the need for expeditious growth of renewable sources of energy coupled with energy storage solutions so as to meet the future challenges of energy transition and growing power demand. Hon’ble Minister mentioned about the importance of the Government of India’s role in aiding human resources development for achieving better outputs.
Joint Secretary (Distribution), Ministry of Power, GoI made a presentation highlighting key areas of intervention identified during first two meetings of the GoM and proposed measures to be taken by the stakeholders (Central Govt., State Govts. and Regulatory Commissions) to address the viability concern for deliberation.
TATA power distribution, Odisha, as a special invitee, shared the best practices adopted and their journey toward making their DISCOMs profitable.
The member States actively participated in the meeting and presented the overview of State DISCOMs. They gave valuable suggestions for improving the financial condition of DISCOMs. States of Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Maharashtra and Tamil Nadu made presentations on the subject.
The contours of the Action plan identifying the ways to reduce the outstanding debts and losses of the distribution utilities and the means to bring them into profits, were discussed in detail.
Emphasis was placed on the need for review of regulators’ performance for determining tariffs. The support from Government of India for Privatisation initiatives by State was suggested. The need for regulators to adapt to the latest developments in the sector including the current levels of RE integration, the requirements of capacity building and O&M costs, while finalizing the tariff, was also discussed. It was discussed that delays in payment of Government department dues and subsidies are forcing DISCOMs to resort to working capital loans, which are not being passed on in tariff. There are also delays in passing on of Fuel and Power Purchase Cost Adjustments in tariffs thus creating need for working capital which are not considered in Annual Revenue Requirements of the Utilities. To avoid future tariff shocks, it was suggested to link tariffs to annual inflation-linked tariff hike.
The Group of Ministers reiterated its commitment and expressed resolve to take necessary measures for improving the financial viability of DISCOMs.
In his Closing remarks, the Hon’ble Union Minister of State emphasized on the need for States to demonstrate greater political will and determination to make the power sector viable and urged the member States to work upon the ideas that have emerged during the meeting. It was recommended to invite All India DISCOM Association (AIDA) to the next GoM meeting for their suggestions.
It was also unanimously decided to have 4thmeeting of GoM in Andhra Pradesh in the month of April.