As part of a plan to strengthen regional electricity retailers, the government may allocate Rs 3 lakh crore to make the sector more attractive to foreign investors.
Those familiar with the matter told Bloomberg that the announcement may be made as part of the Union Budget that is set to be unveiled on February 1. This will be a fresh attempt to revive state distribution utilities and reform the sector that us incurring heavy losses, after a similar exercise proposed in 2015 failed. The power ministry is currently discussing the matter.
Losses incurred by India’s power companies rose 69 percent to Rs 496.2 billion in FY2019, according to the latest data. The allocation would be a shot in the arm for the sector and spending on upgrading infrastructure and technology will be spread over a few years. The Centre would give out annual grants to states that meet the targets set by it as part of the reforms.
Some specifics of the proposal would include separating power feeder grids for farmers and residential users, installing smart meters to stop pilferage and encourage timely payment and also the replacement of overhead cables with insulated wires to prevent theft of electricity.
Power retailers, controlled mostly by states, lose about a fifth of their revenue due to technical or commercial reasons such as electricity theft, poor infrastructure, billing and collection.
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