Revamped Distribution Sector Scheme

Revamped Distribution Sector Scheme

Part of: GS Prelims and GS-III – Discoms; Infrastructure

In news

• Recently, the Cabinet Committee on Economic Affairs has approved a Reforms-based and Results-linked, Revamped Distribution Sector Scheme worth Rs. 3.03 trillion.
  • The Centre’s share will be Rs. 97,631 crore.
• Aim: To improve the operational efficiencies and financial sustainability of discoms (excluding Private Sector DISCOMs).

About the revamped scheme

• It will provide conditional financial assistance to strengthen the supply infrastructure of discoms (power distribution companies).
• The financial assistance will be based on meeting pre-qualifying criteria and upon achievement of basic minimum benchmarks.
• All the existing power sector reforms schemes such as Integrated Power Development Scheme, Deen Dayal Upadhyaya Gram Jyoti Yojana, and Pradhan Mantri Sahaj Bijli Har Ghar Yojana will be merged into this umbrella program.
• The scheme will be available till 2025-26.
• Nodal Agencies: Rural Electrification Corporation and Power Finance Corporation.
• Special Category States/UTs: Sikkim, J & K, Ladakh, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands, and Lakshadweep
• Objectives:
  • Reduction of AT&C losses (operational losses due to inefficient power system) to 12-15% by 2024-25.
  • Reduction of cost-revenue gap to zero by 2024-25.
  • Developing Institutional Capabilities for Modern DISCOMs.

Components of the scheme

• Consumer Meters and System Meters:
  • A compulsory smart metering ecosystem across the distribution sector
  • Approximately 10 crore prepaid Smart Meters to be installed by December, 2023 in the first phase.
• Feeder Segregation:
  • Funding for feeder segregation for unsegregated feeders, which would enable solarization under the PM-KUSUM Scheme.
• Modernization of Distribution system in Urban Areas
• Rural and Urban area System strengthening