Government initiatives in India in Power Sector

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Summary of the Article:

The Government of India has implemented a series of structural, financial, and technology‑driven reforms to improve the operational efficiency and financial viability of DISCOMs and GENCOs. These initiatives collectively aim to reduce AT&C losses, ensure timely payments, modernise networks, attract private investment, and enhance long‑term sector sustainability.

Please find some of the key government initiatives that are taken in India at National level in distribution power utilities level, which can help in improving the financial conditions of the GENCOs and DISCOMs in their respective states and UTs.

Ultra Mega Power Projects

Ministry of Power launched a unique initiative in 2005-06 to facilitate the development of Ultra Mega Power Projects (UMPPs) each having a capacity of about 4000 MW each, at both the coal pitheads and coastal locations aimed at delivering power at competitive cost to consumers by achieving economies of the scale. The Central Government has accordingly taken the initiative for facilitating the development of UMPPs under tariff based competitive bidding route using super critical technology on build, own and operate (BOO) basis. Central Electricity Authority (CEA) is the Technical partner and Power Finance Corporation (PFC) is the Nodal Agency.

In order to enhance investors' confidence, reduce risk perception and get good response to competitive bidding, PFC incorporates Special Purpose Vehicles (SPVs) for each UMPP to undertake the bidding process on behalf of the power procuring (beneficiary) States. The purpose of the SPVs is to carry out the bid process management and obtain various clearances/consents for the projects so that the same are transferred to the successful bidder along with the SPV, who is selected through the tariff based International Competitive Bidding (ICB) in accordance with the "Guidelines for determination of tariff by bidding process for procurement of power by distribution licensees", issued by Ministry of Power, Govt of India, as amended from time to time

Other UMPPs Identified:

  1. Orissa Integrated Power Ltd., District Sundargarh, Odisha UMPP,
  2. Coastal Tamil Nadu Power Ltd., Cheyyur UMPP, District Kanchipuram, Tamil Nadu
  3. Bihar Mega Power Ltd, Bihar UMPP, Banka District, Bihar
  4. Deoghar Mega Power Ltd, Jharkhand 2nd UMPP, District Deoghar, Jharkhand
  5. Sakhigopal Integrated Power Co. Ltd., Orissa 1st Additional UMPP, District Bhadrak, Odisha
  6. Ghogarpalli Integrated Power Co. Ltd., Orissa 2nd Additional UMPP, District Kalahandi, Odisha
  7. Coastal Maharashtra Mega Power Ltd. Maharashtra UMPP, District Sindhudurg
  8. Coastal Karnataka Power Ltd., Karnataka UMPP, Karnataka
  9. 2nd UMPP in Tamil Nadu
  10. 2nd UMPP in Gujarat
  11. UMPP in Uttar Pradesh

Subsidiaries of PFC (PFCCL and UMPPs):

  1. PFC Consulting Ltd
  2. Orissa Integrated Power Ltd
  3. Odisha Infrapower Ltd
  4. Coastal Tamil Nadu Power Ltd
  5. Cheyyur Infra Ltd
  6. Bihar Mega Power Ltd
  7. Bihar Infrapower Ltd
  8. Deoghar Infra  Ltd
  9. Deoghar Mega Power Ltd
  10. Sakhigopal Integrated Power Company Ltd
  11. Ghogarpalli Integrated Power Company Ltd
  12. Coastal Maharashtra Mega Power Ltd
  13. Coastal Karnataka Power Ltd
  14. Tatiya Andhra Mega Power Ltd
  15. Chhattisgarh Surguja Power Ltd
  16. Jharkhand Infrapower Ltd

IPDS/R-APDRP

IPDS

The “Integrated Power Development Scheme” (IPDS) was launched by Ministry of Power, Government of India with the objectives of:

1. Strengthening of sub-transmission and distribution network in the urban areas;

2. Metering of distribution transformers /feeders / consumers in the urban areas.

3. IT enablement of distribution sector and strengthening of distribution network as per CCEA approval dated 21.06.2013 for completion of targets laid down under Restructured Accelerated Power Development and Reforms Programme (R-APDRP) for 12th and 13th Plans by carrying forward the approved outlay for R-APDRP to IPDS.

The scheme will help in reduction in AT&C losses; establishment of IT enabled energy accounting / auditing system, improvement in billed energy based on metered consumption and improvement in collection efficiency.

The estimated cost of the scheme with the components of strengthening of sub-transmission and distribution networks, including metering of consumers in the urban areas is Rs. 32,612 crore which includes the requirement of budgetary support from Government of India of Rs. 25,354 crore over the entire implementation period.

The component of IT enablement of distribution sector and strengthening of distribution network approved by CCEA in June, 2013 in the form of R-APDRP for 12th and 13th Plans will get subsumed in this scheme and CCEA-approved scheme outlay of Rs.44, 011 crore including a budgetary support of Rs. 22,727 crore will be carried over to the scheme of IPDS.

R-APDRP

Ministry of Power, Government of India, has launched the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) in July 2008 with focus on establishment of base line data, fixation of accountability, reduction of AT&C losses upto 15% level through strengthening & up-gradation of Sub Transmission and Distribution network and adoption of Information Technology during XI Plan.Projects under the scheme shall be taken up in two parts. Part-A shall include the projects for establishment of baseline data and IT applications for energy accounting/auditing & IT based consumer service centres. Part-B shall include regular distribution strengthening projects and will cover system improvement, strengthening and augmentation etc. 

PFC has been designated as the nodal agency to operationalise the programme and shall act as a single window service under  R-APDRP. As nodal agency PFC shall receive a fee as well as the reimbursement of expenditure in implementation of the programme as per the norms to be decided by the RAPDRP Steering Committee. Source: www.ipds.gov.in

Independent Transmission Projects

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition, initiation of process of seeking forest clearance, if required and to conduct bidding process etc.

PFC Consulting Limited (PFCCL), a wholly owned subsidiary of PFC, has been nominated as 'Bid Process Coordinator' by Ministry of Power, Govt. of India for the development of independent transmission projects. Source: www.pfcclindia.com

Annual Integrated Rating and Ranking of Power Distribution Utilities

Power distribution utilities are the critical link in India's power sector, responsible for delivering electricity to end consumers and also collecting revenue for re-distribution across the entire value chain. Therefore, ensuring financial viability and performance improvement of power distribution sector has remained one of the top priorities of the Government of India. In the last decade, Government of India has supported State Governments and power distribution utilities through various schemes such as IPDS, UDAY, RDSS, LPS Rules etc. These reform programs have helped achieve substantial improvement in operational and financial performance of power distribution utilities. Given the scale of investments and government support directed towards the power distribution sector, it is imperative to monitor the financial and operational performance of power distribution utilities on a continuous basis. The Annual Integrated Rating and Ranking of power distribution utilities is an important initiative in this direction. Now in its 14th edition, the report is considered as a credible source of information on financial and operational performance of power distribution utilities. It provides a transparent and objective framework for utilities to assess their relative performance, identify gaps and benchmark themselves against peers. The report also serves as a valuable reference for policymakers, regulators, lenders and other stakeholders in designing policies, formulating corrective measures, tracking reforms, and assessing the impact of interventions. 

The 14th Integrated Rating Exercise methodology comprises 15 base rating metrics and 9 disincentives, culminating in a comprehensive score out of 100 to evaluate each utility’s performance holistically. Based on the scores received and specific overriding conditions, utilities are assigned grades (A+, A, B, B-, C, C- and D). The 14th Integrated Rating Exercise maintains the same rating framework (Financial Performance, Operational Performance and External Environment) as the 13th exercise, with limited changes in three parameters: 

• ACS-ARR Gap: Cash adjustment is done using Net Trade Receivables instead of Gross Trade Receivables 

• Days Payable to GENCOs & TRANSCOs: Scoring thresholds revised to award full marks up to 60 days of payables 

• Leverage parameter is replaced with ‘Debt to Asset’ ratio Out of the 72 power distribution utilities in the country, 65 have been rated in the 14th Integrated Rating compared to 63 in 13th IR. The additional utilities rated in this year’s exercise as compared to 13th IR are Torrent Power Ahmedabad and Torrent Power Surat. Utilities not rated in 14 th IR are as follows: 

• CESC (Kolkata), DNHDDPDCL and CPDL (Chandigarh) as they did not participate in the rating exercise Executive Summary 

• Lakshadweep Power Department as their accounts were not received 

• JPDCL and KPDCL as their financial statements are not representative of the financial condition of the DISCOMs given the nature of the transactions, hence not considered for ratings 

• Tata Power Mumbai as their segregated accounts for distribution business were not submitted

National Smart Grid Mission (NSGM)

NSGM Establishment: National Smart Grid Mission has been established by Govt. of India vide MoP Office Memorandum dated 27.03.2015 to accelerate Smart Grid deployment in India. NSGM has been in operational since January 2016 with dedicated team. NSGM has its own resources, authority, functional & financial autonomy to plan and monitor implementation of the policies and programs related to Smart Grids in the country.


Structure: NSGM is housed under MoP considering the fact that most of the prominent stakeholders (DISCOMs, Regulators, Electrical Manufactures, CEA etc.) for Smart Grid are associated with MoP. It is important to note that Smart Grid is a dynamic and evolving concept due to constant technological innovations. Therefore, the objectives, structure and functioning of NSGM is sketched so as to allow sufficient freedom and flexibility of operations without needing to refer the matter to different Ministries / Agencies frequently.


NSGM functions with three tier hierarchical structure: 1st Level – Governing Council (GC), headed by Minister of Power, 2nd Level – Empowered Committee (EC), headed by Secretary (Power), Supportive Level – Technical Committee (TC), headed by Chairperson CEA, 3rd Level – NSGM Project Management Unit (NPMU).


NPMU is headed by Director NPMU. Director NPMU is the Member of GC and EC, and Member Secretary of TC. NPMU is the implementing agency for operationalizing Smart Grid activities in the country under the guidance of GC and EC.


Corresponding to the NPMU at national level, each of the States will also have a State Level Project Management Unit (SLPMU) chaired by the Power Secretary of the State.


The Smart Grid Knowledge Centre (SGKC) developed by POWERGRID with funding from MoP acts as a Resource Centre for providing technical support to the Mission in all technical matters, including development of technical manpower, capacity building, outreach, suggesting curriculum changes in technical education etc.


Phase-1 (2015-2017)

Phase-2 (2017-2021)

Phase-3 (2021-2024)

Implementation of Late Payment Surcharge Rate, 2022

Ministry of Power (MoP) vide Gazette Notification dated 3rd June’ 2022, notified “The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022” (LPS Rules). These rules provide a mechanism for settlement of outstanding dues of Generating Companies, Inter-State Transmission Licensees and Electricity Trading Licensees.

The rules provide for clubbing of all outstanding dues (as on 03.06.2022) including Principal, Late Payment Surcharge etc. into a consolidated amount which can be paid in interest free Equated Monthly Instalments (EMI). The maximum number of such EMIs can be forty eight (48) based on the quantum of the total outstanding dues. The rules also indicate modalities for implementation and also penalties for not making payments, in line with the Re-determined Payment Schedule.

Further, non-payment of current dues by DISCOMs, one month after the due date of payment or two and half months after the presentation of power bill, whichever is later, shall attract regulation of power as laid down in the LPS rules, 2022.

PFC has been designated by MoP, as the Nodal Agency for implementation of LPS Rules’ 2022.  PFC shall be responsible for all the activities related to implementation of the said Rules including regular review and monitoring. PFC has also been entrusted with the task of  coordinating with all States/UTs, DISCOMs, GENCOs, CTU, Trading Cos, POSOCO, FIs/Banks etc. to ensure timely flow of requisite information/data pertaining to implementation of the Rules. Refer to PRAAPTI Portal for latest status of outstanding dues.

RDSS


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