Weekly Power Sector Round up: 18th January 2020

Government proposes a Rs. 1.1 lakh crore grant for State DISCOMs

The Government is planning on introducing a new scheme, proposed to be called Atal Distribution System Improvement Yojana (ADITYA), to follow the Ujwal Discom Assurance Yojana (UDAY), which is expiring March 2020.

As part of this scheme, the Government is likely to propose a grant of Rs 1.1 lakh crore to State distribution companies under a bailout scheme that would mandate DISCOMs with high losses to privatise operations or appoint distribution franchisees and invest in infrastructure upgradation.

“The scheme is reform and result oriented where the distribution companies will invest first and get money later only when they perform,” a senior government official said.

Electricity Act may be amended to ensure DISCOMs honour PPAs

The Government is planning on amending the Electricity Act to prevent states from refusing to honour power purchase agreements, particularly renewable energy contracts, and DISCOMs from defaulting on dues.

The goal of the amendment would be to ensure contractually agreed upon tariffs are not changed post execution of the contracts and electricity regulation commissions have more authority to enforce power purchase agreements between power generation companies and DISCOMs.

This move comes after State Governments in Andhra Pradesh and Maharashtra refused to honour power purchase agreements which has led to a deep drop in investor confidence.