In a decent development, the Government of India proposes a grant of INR 1.1 Lakh Crore for state discoms under a new scheme – Atal Distribution System Improvement Yojana (ADITYA). The scheme is supposed to be announced in the upcoming budget. The initiative is an advancement as UJJWAL Yojana is about to get expired in March 2020.

The government wishes for the state distribution companies under the scheme to follow the mandate and these discoms with high losses to either privatise operations or appoint distribution franchisees and invest in infrastructure upgradation.

Overall, the Government expects to spend about INR 3 lakh crore of investments in the distribution sector under the ADITYA scheme.

The scheme as per reports is divided into three parts:

The first part proposes infrastructure upgradation including implementation of smart metering worth INR 2,30,000 crore, of which 15% is supposed to be supported by the central government and 10% by the state. The Centre’ share of funding is likely to be approximate of Rs 25,000 crore.

The second part would suggest inefficient discoms to undergo institutional reforms to be able to take advantage of investment support. The scheme envisages lowering aggregate technical and commercial (AT&C) losses of discoms to 12% and eliminating gaps between their costs and revenue. According to the UDAY portal as of January 2020, the average commercial losses of discoms are at 21.35% and the revenue gap at 0.38 paise per unit of power.

The discoms will have a choice to choose to either operate under a public-private-partnership model or supply power through multiple franchisees in all circles of operation within nine months of joining the scheme.

The Discoms’ dues to all the power producers are estimated at INR 82,000 crore being the major factor behind the stressed-out power sector. Finally, the third part of the scheme is talked to focus on the development of human resource and future technologies at central government support of about Rs 1,500 crore.