Steps taken for Strengthening Power distribution system.

            The Union Government has taken various steps to strengthen the power distribution system of the country.

A Task Force on Private Participation in Power Sector distribution was constituted in November, 2010 under the Chairmanship of Shri B.K. Chaturvedi, Member Planning Commission to develop a framework for enabling private participation in the distribution of electricity.   As per the report,  State representatives were co-opted in the Task Force, which endorsed both Public Private Partnership (PPP) Model and the Franchisee Model leaving it to the States to choose a model that they think is useful for them. 

PPP Model in the distribution of electricity encompasses all functions and obligations relating to distribution of electricity in a license area.  The concessionaire, selected through competitive bidding, would be responsible for maintenance, operation and upgradation of the distribution network and the supply of electricity to the regulated consumers.  Reduction of AT&C losses, improvement in quality of power supplied, strengthening of distribution network, improved customer satisfaction and introduction of competition through open access are some of the salient feature of this model.  

Public Private Partnership (PPP) has been implemented by the way of privatization and appointment of distribution franchisee in some States. The distribution sector in the States of Odisha and Delhi was privatized in 1999 and 2002 respectively. 

Public Private Partnership in the form of Urban Distribution Franchisee (UDF) is in place in the states of Maharashtra in towns of Bhiwandi, Nagpur, Aurangabad and in state of Uttar Pradesh in Kanpur & Agra urban areas.

            Electricity is a concurrent subject and the responsibility of electricity distribution rests with the States. Government of India acts as a facilitator in supplementing the efforts of States to provide power to consumers in an improved manner.

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However, under the Restructured-Accelerated Power Development and Reforms Programme (R-APDRP), projects worth Rs.32323.67 Crores have been sanctioned. Cumulatively an amount of Rs.6456.01 Crore has been disbursed under R-APDRP, for sanctioned projects.

The steps taken by the Union Government to strengthen the power distribution system of the country are as under:


To reduce the AT&C losses in the country and to improve the power distribution sector of state utilities, Government of India has launched the Restructured-Accelerated Power Development and Reforms Programme (R-APDRP) during 11th Plan period. The focus of R-APDRP is on actual demonstrable performance by utilities in terms of sustained AT&C loss reduction in the project areas. Projects under the scheme are taken up in two parts in towns having population more than 30,000 (10,000 for special category States) as per census 2001. Part-A of the scheme is for establishing IT enabled system for energy accounting / auditing and Supervisory Control and Data Acquisition (SCADA) for big cities (population:4 lacs and Annual Energy Input: 350MU) whereas Part-B is for up-gradation, augmentation & strengthening of electrical infrastructure in project towns. 

So far (as on 28.2.2013), under R-APDRP, projects worth Rs.32323.67 have been sanctioned. Cumulatively an amount of Rs.6456.01Crore has been disbursed under R-APDRP, for sanctioned projects.

Rating of Utilities

In order to enable a unified approach by Financial Institutions (FIs)/ Banks for funding State Distribution Utilities, Ministry of Power has developed an integrated rating methodology for State Distribution Utilities. The overall objective of the integrated rating methodology is to devise a mechanism for incentivizing/ disincentivising the distribution utilities so as to improve their operational and financial performance, enable regulatory compliance and influence respective State Govts. to fulfill commitments on subsidy, equity support including transition funding support to achieve self-sustaining operations.

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Order of Appellate Tribunal for Electricity (APTEL)

Ministry of Power has requested “Appellate Tribunal for Electricity” to issue directions under section 121 of the Electricity Act to the State Regulatory Authorities to revise the tariff appropriately (suo-motto, if required), in the interest of improving the financial health and long term viability of electricity sector in general and distribution utilities in particular. 

The Appellate Tribunal for Electricity(APTEL) in its order dated 11th November, 2011 has issued directions to the State Commissions with a view to improve the financial health of SEBs/ Discoms and  ultimately  help  to deal  with  the mounting arrears of pending dues of the distribution utilities, which inter alia include automatic fuel & power purchase adjustment cost, suo-motto determination of tariff, if petition is not filed by utility, annual truing up of accounts and no resource gap to be left uncovered by SERCs. The regulatory assets are to be created only in extraordinary circumstances & to be liquidated in maximum 3 years.

Model Tariff Guidelines:

Forum of Regulators have resolved to implement Model Tariff Guidelines, which address issue of rationalization of tariff.  FOR (Forum of Regulators) has circulated Model Tariff Guidelines to SERCs, for their adoptions.  Now SERCs are required to adopt these tariff guidelines and make regulation. Adoption of Model Tariff Guidelines is a precondition for disbursement of loan by Power Finance Corporation and Rural Electrification Corporation to utilities.

Financial Restructuring of State Distribution Companies

A scheme for Financial restructuring of State Owned Discoms has been notified by the Government of India to enable the turnaround of the State Discoms and ensure their long term viability. The scheme contains measures to be taken by the State Discoms and State Govt for achieving financial turnaround by restructuring their debt with support through a Transitional Finance Mechanism by Central Govt.

Raja Raja Cholan
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