{"id":70976,"date":"2020-10-05T15:36:06","date_gmt":"2020-10-05T10:06:06","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=70976"},"modified":"2020-11-26T15:37:44","modified_gmt":"2020-11-26T10:07:44","slug":"power-sector-in-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/power-sector-in-india\/","title":{"rendered":"Power sector in India"},"content":{"rendered":"<p><strong>Source-\u00a0<\/strong><a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/coronavirus-impact-economy-lifestyle-governance-vikram-singh-mehta-6702964\/\"><strong>The Indian Express<\/strong><\/a><\/p>\n<blockquote><p><strong>Syllabus- GS 3-\u00a0<\/strong>Infrastructure: Energy, Ports, Roads, Airports, Railways etc.<\/p><\/blockquote>\n<p><strong>Context<\/strong>\u2013 The financial hole into which the DISCOMS have fallen will deepen in light of COVID.<\/p>\n<p><strong>What is UDAY scheme?<\/strong><\/p>\n<ul>\n<li>Launched in\u00a0November 2015,\u00a0the Ujjwal DISCOM Assurance Yojana (UDAY) was designed to turn around the precarious financial position of state distribution companies (DISCOMS).<\/li>\n<li>The state governments took over\u00a075 % of the debt of their DISCOMS, issuing lower-interest bonds to service the rest of the debt.<\/li>\n<li>In return,\u00a0DISCOMS were given target dates (2017-19) to meet efficiency parameters like reduction in power lost through transmission, theft and faulty metering.<\/li>\n<\/ul>\n<p><strong>What is the current situation of State Electricity Distribution Companies DISCOMS in India?<\/strong><\/p>\n<p>DISCOMS today are facing unprecedented cash flow problems-<\/p>\n<ol>\n<li><strong>Loss<\/strong>\u2013<\/li>\n<\/ol>\n<ul>\n<li>The losses of DISCOMS, which had reduced in 2016-18, have\u00a0nearly doubled in 2019 to INR 28,036 crore.<\/li>\n<li>DISCOMS have also missed the FY 2019 UDAY target to bring down their aggregate technical and commercial (AT&amp;C) losses to 15 %.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li>The finance minister allocated Rs 1.25 lakh crore to DISCOMS in her Rs 20-lakh crore stimulus package. This is roughly the amount the government portal, PRAAPTI, indicates are the dues owed by DISCOMS to the power generators.<\/li>\n<\/ol>\n<p><strong>What were the reasons for failure of UDAY scheme?<\/strong><\/p>\n<ol>\n<li>While the\u00a0ACS-ARR gap\u00a0was supposed to be eliminated by FY19,\u00a0it remains as high as Rs 0.25 per unit.\n<ol>\n<li>Part of the problem can be traced to\u00a0inadequate tariff hikes. Currently, only four states \u2014\u00a0Himachal Pradesh, Gujarat, Maharashtra and Karnataka\u00a0\u2014 had recorded an ACS-ARR below 0.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol start=\"2\">\n<li>The issue of whether the power subsidy released by state governments is adequate.<\/li>\n<li>Dues by state DISCOMS to power generators have risen.<\/li>\n<\/ol>\n<p><strong>What are the fundamental problems in DISCOM sector in India and it\u2019s possible Solutions?<\/strong><\/p>\n<ol>\n<li><strong>Cross- subsidy<\/strong>\u2013 Electricity price for certain segments\u00a0such as agriculture and the domestic category is\u00a0cross-subsidized\u00a0by the industries and the commercial sector. This affects the competiveness of industry.<\/li>\n<li><strong>Led behind in eliminating the electricity cost gap<\/strong>\u2013 There is the\u00a0problem of AT&amp;C,\u00a0which is\u00a0a technical term\u00a0that\u00a0stands for the gap\u00a0between the cost of the electricity that DISCOMS gets from the generating company, the bills that it raises and the final realization\u00a0from the collection process from end-consumers.<\/li>\n<\/ol>\n<p><strong>Solution-<\/strong><\/p>\n<ol start=\"3\">\n<li><strong>Clearing dues<\/strong>\u2013 The stakeholders involved in the electricity value chain (generators, transmission companies, DISCOMS, consumers, regulators and state governments) to clear their dues to each other, the DISCOMS would look much stronger.<\/li>\n<li><strong>Efficiency<\/strong>\u2013 The AT&amp;C (aggregate transmission and distribution losses) losses need to go down, and billing and collection efficiencies should go up.<\/li>\n<\/ol>\n<p><strong>Way forward<\/strong><\/p>\n<p>Need of an hour is a multi-pronged and networked overhaul of the DISCOM sector and, in particular, the regulatory structure and deliverables. All stakeholders will have to take a haircut. COVID will introduce a new pressure point (i.e. Generation Z and the millennial) on governments that would compel them to look at the inherited structural problems through a different angle.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source-\u00a0The Indian Express Syllabus- GS 3-\u00a0Infrastructure: Energy, Ports, Roads, Airports, Railways etc. Context\u2013 The financial hole into which the DISCOMS have fallen will deepen in light of COVID. What is UDAY scheme? Launched in\u00a0November 2015,\u00a0the Ujjwal DISCOM Assurance Yojana (UDAY) was designed to turn around the precarious financial position of state distribution companies (DISCOMS). The&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/power-sector-in-india\/\">Continue reading <span class=\"screen-reader-text\">Power sector in India<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[1397],"class_list":["post-70976","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-eco_9","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700786617,"cached_date":1704954350},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/70976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=70976"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/70976\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=70976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=70976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=70976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}