DISCOMs To Be Privatized In Union Territories : Ministry

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Finance Minister Nirmala Sitharaman recently announced Rs 90,000 crore Liquidity Injection for DISCOMs and Union Ministry of Power writing to all States/UTs extending Rs 90,000 crore financial package now the ministry has also added some of the important schemes for the same.

During her press conference, Smt. Sitharaman outlined the need for Policy reforms to fast track investments and the steps taken by the Government in this regard. She stated that fast track clearance is being done through the Empowered Group of Secretaries, a Project Development Cell would be set up in each Ministry to prepare investable projects and coordinate with investors and Central and State governments.  

The Finance Minister announced following policy reforms to fast track investment in an effort towards Aatma Nirbhar Bharat:

  • There will be fast tracking of investment clearance through the Empowered Group of Secretaries.
  • Project Development Cell will be constituted in each Ministry to prepare investable projects, coordinate with investors and Central/State Governments.
  • There will be a ranking of States on investment attractiveness to compete for new investment.
  • Incentive schemes for promotion of new champion sectors will be launched in sectors such as solar PV manufacturing; advanced cell battery storage etc.

Sitharaman also announced that a scheme will be implemented in States through challenge mode for Industrial Cluster Upgradation of common infrastructure facilities and connectivity. There will be availability of industrial land/land banks for promoting new investments and making information available on the Industrial Information System (IIS) with GIS mapping. 3376 Industrial Parks/ Estates/SEZs in five lakh hectares are mapped on IIS. All Industrial Parks will be ranked during 2020-21.

The Finance Minister today announced the following structural reforms in the the details are as follows:

Policy Reforms to fast-track Investment which includes Effort towards AtmanirbharBharat • Fast track Investment Clearance through Empowered Group of Secretaries (EGoS), Project Development Cell in each Ministry to prepare investable projects, coordinate with investors and Central/ State Governments, Ranking of States on Investment Attractiveness to compete for new investments, Incentive schemes for Promotion of New Champion Sectors will be launched in sectors such as Solar PV manufacturing; Advanced cell battery storage; etc.

Upgradation of Industrial Infrastructure under which scheme that will be implemented in States through Challenge mode for Industrial Cluster Upgradation of common infrastructure facilities and connectivity, Availability of Industrial Land/ Land Bank for promoting new investments and making information available on Industrial Information System (IIS) with GIS mapping,3376 industrial parks/estates/SEZs in 5 lakh hectares mapped on Industrial Information System (IIS) and All industrial parks will be ranked in 2020-21.

A Tariff Policy laying out the following reforms will be also released which will consist of 

A. Consumer Rights- DISCOM inefficiencies not to burden consumers • Standards of Service and associated penalties for DISCOMs, DISCOMs to ensure adequate power; load-shedding to be penalized

B. Promote Industry- Progressive reduction in cross-subsidies, Time-bound grant of open access and Generation and transmission project developers to be selected competitively 

C. Sustainability of Sector- No Regulatory Assets, Timely payment of Gencos, and DBT for subsidy; Smart prepaid meters.

Ministry has also decided to Privatize of Distribution in UTs which includes Sub-optimal performance of power distribution & supply, Power Departments / Utilities in Union Territories will be privatized,It Will lead to better service to consumers and improvement in operational and financial efficiency in Distribution and Provide a model for emulation by other Utilities across the country.

Sambitosh Mohapatra, Leader – Power and Utilities, PwC India said “Power distribution in UTs to be privatized is an exciting step ahead. These are smaller and manageable entities. It will assist in generating private sector appetite amongst Indian and international investors; various PPP models will be tested; and a quick demonstration of possible efficiency improvement and customer engagement models. It will provide confidence to larger states and utilities to undertake privatization based on improvements achieved here.”

Sumant Sinha, CMD, ReNew Power in regards to that said “The union government’s announcements on policy reforms in critical sectors like Mining, Aviation, Defence production, and Space has opened up the gates for increased participation of Indian companies in these sectors. These measures will not only go a long way in making India- Atmanirbhar but also create a more transparent policy framework for private sector participation. It is now up to the Indian Corporates to live up to the promise and make the best out of this opportunity. What is also heartening is that the government has taken another step on the path of distribution reforms by indicating early implementation of the National Tariff Policy and starting the privatization process for discoms. Coming, just days after the announcement of the ₹ 90,000 Cr fund infusion into discoms, the sector is witnessing some of the most far-reaching reforms seen in a long time”.

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