Centre Urges States To Boost Financial Health Of Power Utilities

Lucknow: Union Minister of State for Power Yesso Naik on Sunday highlighted the need for measures to help power utilities of states to improve their financial viability.

Addressing the states’ group of ministers meeting here, Minister Naik highlighted the need for designing a mechanism for financial restructuring of liabilities of distribution utilities, lowering the interest burden, development of storage solutions, facilitating daytime power supply for agriculture to lower the overall power purchase costs and reducing subsidy burdens, according to a statement issued after the meeting. The Minister also emphasised the need for implementing AI and digital innovations and the need for ensuring cost-reflective tariffs for the financial viability of the power sector. He added that implementing these measures would help utilities improve their financial sustainability.

He also underscored the need for a scheme similar to the Ujwal DISCOM Assurance Yojana (UDAY), a financial turnaround and revival package for electricity distribution companies (DISCOMS) in India. The Energy Ministers of Uttar Pradesh, Andhra Pradesh, Madhya Pradesh and Maharashtra and senior officials from the Central and State governments, State Power Utilities of Member States, Power Finance Corporation (PFC) Ltd and REC Ltd attended the meeting. 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. The 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 a review of regulators' performance for determining tariffs. The support from the Government of India for Privatisation initiatives by the 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 operation and maintenance (O&M) costs while finalising the tariff, was also discussed.