HomeEnergy NewsElectricity amendment bill: No final decision yet, RK Singh tells Lok Sabha 

Electricity amendment bill: No final decision yet, RK Singh tells Lok Sabha 

With the electricity amendment bill, the Union power ministry proposes a slew of regulatory changes to shore up state-run power distribution companies, which owe electricity generation companies more than Rs5 lakh crore. Power sector lenders have disbursed Rs85,000 crore as part of a stimulus package, but industry observers say nothing short of an overhaul of the power distribution business will do the trick.

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By Anshu Sharma  December 9, 2021, 4:50:52 PM IST (Updated)

Electricity amendment bill: No final decision yet, RK Singh tells Lok Sabha 

The government has been proposing changes to the Electricity Act to bring in operational and financial efficiencies in power distribution companies majorly run by states. The Union Ministry of Power had proposed delicencing discoms, cost-reflective tariff, simplification of tariff structure and reduction of cross-subsidy, among others. The proposed changes under electricity amendment bill are listed for discussion in the winter session of Parliament. 



When asked whether the government proposes to bring in legislation to amend the Electricity Act, 2003, Minister of Power RK Singh replied, "The condition of most state government-owned distribution companies is a matter of grave concern. Discoms have not been able to pay generation companies for the power procured, and the dues are estimated to be in excess of Rs 1.56 lakh crore [close to 11 months of the generation companies' revenue]. Therefore, reforms have been deliberated upon in consultation with the states and all stakeholders. No final decision has been arrived at so far.” 


The reply also highlighted that discoms’ supply losses at the end of FY20 range from an average of 21% to a maximum of 60.16 %. Similarly, the gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR) -- excluding regulatory assets and Ujwal DISCOM Assurance Yojana (UDAY) grants -- averages 60 paise per unit in FY20. 


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The sector is in doldrums. Discoms are bankrupt. Given the urgency of energy transition and the increasing role of the private sector, it is of utmost importance to improve the financial health of Discoms," said Mohit Kumar, senior vice-president, DAM Capital. 


Kumar said the only way to rectify the dire situation is to alter the logistics of the distribution business. "An electricity amendment bill is crucial to bring in the desired reforms. Its high time that state governments came on board to revive investment, improve consumer welfare and push for smooth energy transition," he added.

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By 2019-20, accumulated losses of all discoms in India had risen to more than Rs 5.07 lakh, crore as per the reply given to Lok Sabha today. Power sector lenders Power Finance Corporation (PFC) and Rural Electrification Corporation Limited (REC) have so far disbursed about Rs 85,000 crore to discoms as part of Rs 1.35 lakh crore under the Aatma Nirbhar Bharat stimulus package. As of today, discoms owe electricity generation and transmission companies Rs1 lakh crore in dues. Public power generating companies are owed Rs 23,000 crore, transmission companies are due Rs 2,606 crore,  private power generation companies await Rs 54,567 crore in arrears and renewable energy companies are owed Rs 20,502 crore. 

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