Government Likely to Amend Electricity Act to Ensure that DISCOMs Enter PPAs

The Power Finance Corporation (PFC) has written to six states regarding the timely completion of implementing the supervisory control and data acquisition (SCADA) /distribution management system (DMS) under the government’s Restructured Accelerated Power Development and Reforms Program (R-APDRP) to enhance reliability in the power distribution network.

These six states are Gujarat, Rajasthan, Jharkhand, Punjab, Telangana, and Kerala.

The R-APDRP is a central program focused on sustained power loss reduction, the establishment of automated systems for the collection of baseline data, adoption of information technology for energy accounting, and regular distribution strengthening projects. Most importantly completion of the SCADA systems deployment will enable the distribution companies (DISCOMs) to detect aggregate technical and commercial (AT&C) loss pockets and reduce the losses. AT&C losses have been one of the main reasons for the financial distress of DISCOMs.

In Gujarat, the central government had approved ₹1.38 billion (~$19.45 million) for six cities – Ahmedabad, Jamnagar, Bhavnagar, Rajkot, Surat, and Vadodara. Out of these, only Vadodara has completed the project. The other five cities had committed to complete the project by February 28, 2019.

The letter mentions that the interest accrued up to March 31, 2018, will be considered for the capitalization or conversion of loan into a grant. If the states want the benefit of loan conversion into a grant, it should complete the project as per the commitment.

Similar letters have been written to other states as well.

In Rajasthan, the central government had allocated ₹1.52 billion (~$21.42million) for five cities – Jodhpur, Bikaner, Ajmer, Kota, and Jaipur. Other than Jaipur, work is completed in four cities.

In Jharkhand, the central government had approved ₹700 million (~$9.87 million) for three cities – Dhanbad, Ranchi, and Jamshedpur. Work is not completed in any of these three cities.

In Punjab, the central government had approved ₹520 million (~$7.33 million) for three cities – Amritsar, Jalandhar, and Ludhiana. Work has not been completed in any of these three cities.

In Telangana, the central government had allocated ₹800 million (~$11.28 million) for two cities – Hyderabad and Warangal. Work is complete in Warangal.

In Kerala, the central government had approved ₹830 million (~$11.70 million) for three cities – Thiruvananthapuram, Kozhikode, and Ernakulam. Work is pending in all these three cities.

The states are losing on interest payment with the delay in execution of the project.

In March 2018, Power Minister R.K. Singh had directed Rural Energy Corporation (REC) and Power PFC to not grant loans to distribution companies which are making losses (above 15 percent) unless they chalk out a plan to reduce them.