September 11, 2020 Read More →

States need to take responsibility for struggling power distribution companies

The Hindu Business Line:

State governments should be made responsible for improving the finances of their struggling power distribution companies (discoms), which continue to incur huge losses, according to a briefing note prepared by IEEFA for the Fifteenth Finance Commission of India.

The financial distress of the state-owned discoms has led to major liquidity issues across India’s power sector. As of May, the discoms had overdue payments to generators totalling ₹116,340 crore.

“The Central government has tried repeatedly to overhaul the power distribution sector through schemes like Integrated Power Development Scheme (IPDS) and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY). It has also provided bailout packages like Ujwal DISCOM Assurance Yojana (UDAY). But these reforms have not delivered the sizeable and sustained improvements the sector so desperately needs,” Tim Buckley, Director of Energy Research at the Institute for Energy Economics and Financial Analysis (IEEFA), says.

“The discoms continue to incur massive operating losses and debts — and their position has deteriorated further with the collapse in electricity demand due to Covid-19.” 

[V Rishi Kumar]

More: States should be responsible for Discom finances: IEEFA India

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