New package soon for easing power retailers' losses: R.K. Singh

New Delhi: Union Power Minister R.K. Singh said on Monday the central government will soon come out with a scheme to help power distribution companies to lower their losses, which will eventually improve the power demand in the country as well as standard of living.

Speaking at the EnergyScape, the Mint energy conclave 2020 in the capital, Singh said the scheme will address one of the biggest challenges in the power sector—the health of power distribution utilities. It will help spur the latent power demand in the economy that is key to making the sector viable.

Singh said that the earlier scheme for loss reduction of power retailers, UDAY, had helped in reducing the collective loss of these entities from about 24% to 18%. The minister said that the scheme worked, but not to the extent the government had wanted. The new scheme will specify a trajectory for loss reduction for power distribution companies and will have incentives and disincentives built into it for meeting the targets.

“We will give assistance for loss reduction such as for (setting up) high voltage distribution systems in loss prone areas. We will give loans provided you stick to the trajectory. If not, we will not be able to give you any loans… That is the package we have drafted. There will be incentives and disincentives," the minister said.

Discoms have so far been the weakest link in the electricity value chain. Poor payment records of state-owned discoms have not only adversely affected power generation companies, but have also contributed to stress in the banking sector. The power sector is reeling under bad loans of over ₹ 1 trillion.

The minister also said that India was on course to achieving its target of meeting 40% of its power demand from renewable energy sources. Singh said India’s existing renewable energy capacity and the projects under construction together, accounts for almost 37% of the country’s installed power capacity. “This means we are close to the target. We will reach the 40% target latest by 20-21 or 2022. By 2030, our estimate is that 50-55% of our power capacity will be from renewable sources. That is impressive by any standards for any country," said the minister.