State-run electricity distribution companies (discoms) reported financial losses of Rs 21,658 crore at the end of FY19, up 4.4% year-on-year, reversing the declining trend since the UDAY scheme for these entities’ revival was launched in November 2015.
Timely revision in power tariffs did not happen even after the launch of UDAY, the debt restructuring programme of the NDA government, in November 2015. In most cases, discoms have not even submitted the mandatory tariff petitions to state electricity regulators (SERCs).
The total debt of power distributors is expected to go up to the level before the implementation of government’s revival plan for the ailing units as states’ finances deteriorated over the past few years.
The UDAY scheme does not address basic issues in power distribution
A recent BusinessLineanalysis (April 21) points out how the financial condition of power distribution companies has only worsened after the launch of the Ujjwal Discom Assurance Yojana (UDAY).
The delays faced by most States in achieving financial and operational goals under the much-touted Ujwal Discom Assurance Yojana (UDAY), launched in 2015, are raising niggling questions on the efficacy of the scheme.
Reduced power demand has been an issue for some time in India and it has been blamed largely on financially challenged DISCOMs (utility companies). One of the most overlooked reasons is energy efficiency.
Power distribution in India is by and large a state-owned monopoly and remains the weakest link in the power sector value chain despite a number of measures taken by the government to address issues over the years.
Despite a big slippage on meeting the operational goals set under the UDAY scheme in FY19 and the Union power ministry repeatedly flagging inadequate tariff hikes as one of the reasons behind state electricity boards’ (SEBs) weak financial health
Inadequate revision of rates alongwith delay in filing tariff petitions are likely to remain an area of concern in the financial year 2020 for distribution companies (Discoms), says a report.
While the operational targets set under the UDAY scheme for the revival of electricity discoms are being missed and the efficacy of the scheme itself has come under a cloud, several state governments are putting further burden on these entities by unveiling various sops for different sections of consumers