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    Prime Minister Narendra Modi reviews power sector: Here's what to expect next

    Prime Minister Narendra Modi reviews power sector: Here's what to expect next

    Prime Minister Narendra Modi reviews power sector: Here's what to expect next
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    By Anshu Sharma   IST (Updated)

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    Prime Minister Narendra Modi on Friday held a meeting to discuss various long term reforms and impact of COVID-19 on the power sector.

    Prime Minister Narendra Modi on Friday held a meeting to discuss various long term reforms and impact of COVID-19 on the power sector. He emphasised on effective enforcement of contracts for bringing investments, improvement in viability of distribution companies, rationalisation of electricity tariff, and timely release of subsidies by the states.
    "The discussions included measures regarding ease of doing business; propagation of renewables; flexibility in the supply of coal; the role of public-private partnerships; and boosting investment in the power sector," according to the press statement released by the Prime Minister's Office.
    PM Modi also underlined the significance of the power sector boost to the economy and called for the need to have effective enforcement of contracts for attracting investments in the sector.
    The union power ministry on April 18 has released a draft Electricity Bill 2020, pitching for Electricity Contract Enforcement Authority (ECEA) to deal with the issues of non-performance of contracts leading to uncertainty and upsetting of investment decisions and ease of doing business in the power sector.
    The draft also proposes to allow state-owned distribution companies (discoms) to privatise discoms by way of sub-licensing and franchisee models to reduce its technical and financial losses in the supply of electricity.
    There are also talks of providing liquidity to the discoms as overdue at the end of March 2020 stands at Rs 79,818 crore for the power generating companies. Power sector lending companies PFC and REC are likely to raise funds via bonds for payment of discom dues.
    The discoms will have to ensure digital payments of electricity bills and self-assessment by consumers for provisional bills, this comes when COVID-19 has led to delay in actual bills and provisional bills are being given to consumers.
    The bill also proposes to bring in a cost-reflective tariff, the simplified tariff for consumers. The state regulators adjust many costs for future recovery which includes subsidy commitment which eventually increases electricity tariff, resulting in weakening of discoms financial health.
    Now, the amendment will allow states to grant subsidy but without provisioning it in the tariff determined by the state regulators. The states will have to grant subsidy through a Direct Benefit Transfer (DBT) for the consumers it plans to give relief.
    The power sector reforms were discussed by the Prime Minister Modi along with union home minister Amit Shah, minister for power and renewable energy RK Singh and union finance minister Nirmala Sitharaman.
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