Govt may announce new scheme for revival of Discoms
Finance minister may announce plan to revive cash-strapped electricity distribution utilities in budget
Published Date - 31 January 2021, 08:20 PM
New Delhi: The government may announce a new scheme for cash-strapped and loss-making electricity distribution utilities to reduce stress in the sector and achieve the goal of ’24X7 Power for All’, a source said. “The discoms are cash-strapped and need some revival package for maintaining 24X7 power supply. A new scheme for revival of discoms has been deliberated upon, which may be announced in the General Budget on Monday,” a source said.
Though Finance Minister Nirmala Sitharaman in her budget speech last year had said that taking electricity to every household has been a major achievement but the distribution sector, particularly the Discoms, were under financial stress. Further measures to reform Discoms would be taken, she had said. An official statement in March last year had also talked about a new scheme. “Decisions have also been taken in the Government to incentivise and enable states to undertake effective Discom reforms; and link central sector schemes to institutional reforms. However, no new scheme regarding the above has been approved yet,” the release said.
States were advised to clear their government department dues and ensure monthly clearance of the same; put in place a strict system of energy accounting; ensure timely payment of subsidy every month; begin a campaign to reduce AT&C (aggregate, technical and commercial) losses; and conversion of all consumer meters into smart prepaid meters/prepaid meters in a period of three years under the UDAY scheme. The financial health of Discoms in the country is not good. They have to resort to load shedding due to limited liquidity to get power supply from gencos.
As per the Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators portal, the discoms’ total outstanding to gencos stood at over Rs 1.39 lakh crore as of November 2020, which includes Rs 1.26 lakh crore of the overdue amount. The outstanding dues become overdue when discoms do not pay gencos for the supply of power after 45 days of generation of the bills.
The huge overdue amount shows that there is a liquidity crunch with the discoms. In order to deal with the issue, the centre had announced a liquidity infusion package for discoms with an outlay of Rs 90,000 crore last year, which was later expanded to Rs 1.2 lakh crore. But now the industry expects some scheme to revive discoms in the Budget to be presented on Monday.
Rs 19,499 cr garnered via PSU stake sale
New Delhi: The government has garnered Rs 19,499 crore through CPSE disinvestment and share buyback so far in 2020-21, as against the Rs 2.10 lakh crore budget target set for the entire fiscal year ending March 31. With Covid-19 related delays impacting big ticket strategic sales and listing of insurance behemoth LIC, the government is likely to miss the budgeted disinvestment target by a wide margin in this financial year.
Finance Minister Nirmala Sitharaman had in her budget for 2020-21 set a target of raising Rs 2.1 lakh crore from privatisation, sale of minority stakes in state-owned companies and share buyback by CPSEs. While Rs 1.20 lakh crore was to come from stake sale in CPSEs, Rs 90,000 crore was to be mopped up from share sale in financial institutions. As many as 4 CPSEs — Hindustan Aeronautics Ltd (HAL), Bharat Dynamics, IRCTC and SAIL— have come out with offer-for-sale (OFS) this fiscal year. This fetched Rs 12,907 crore to the exchequer.
Besides, initial public offering (IPO) by IRFC and Mazagon Dock Shipbuilders together fetched Rs 1,984 crore. Moreover, selling of government stake in private companies held through SUUTI and other transactions garnered about Rs 1,837 crore. So far in current fiscal year, 4 state-owned companies — RITES, NTPC, KIOCL, NMDC– have completed share buyback which got Rs 2,769 crore to the exchequer.
A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available in the open market. The government is also looking to sell its entire 26.12 per cent stake in Tata Communications Ltd (TCL), erstwhile VSNL, through OFS and strategic sale route in the current fiscal. The process of privatisation of Air India, BPCL, Pawan Hans, BEML, Shipping Corp, Neelachal Ispat Nigam Ltd, and Ferro Scrap Nigam Ltd (FSNL) is underway.