In a significant move to modernize its power distribution system, the Government of India has initiated the Smart Meter National Program (SMNP), aiming to replace 25 crore conventional electricity meters with prepaid smart meters over the next five years. This ambitious ₹1.5 lakh crore project is set to transform the operational and financial landscape of distribution companies (discoms) across the country.
Ankit Hakhu, Director at CRISIL Ratings, highlights the program’s potential to offer a substantial capital expenditure opportunity, noting the average cost of ₹6,000 per smart meter, including ancillary expenses. The initiative is further supported by central grants of up to ₹1,350 per unit, aimed at boosting the financial health of discoms. The prepaid nature of these meters is expected to significantly enhance collection efficiency.
SMNP’s strategy involves dividing state discom jurisdictions into circles to be managed by private concessionaires through a competitive bidding process. These concessionaires are responsible for the purchase, installation, and maintenance of smart meters for a decade, with funding coming from consumer payments and central grants.
The program introduces several innovative features to mitigate typical project risks, including modularity in capital expenditure and a direct debit facility for consumer payments, ensuring prioritized annuity payments to project accounts. This framework is designed to attract private sector investment by lowering project risks and enhancing bankability.
However, the initiative faces challenges, such as the potential impact of aggressive bidding on the credit quality of projects, underscoring the need for careful monitoring.
As India moves forward with this technological upgrade, the focus remains on improving billing and collection efficiencies, reducing power theft, and enabling real-time monitoring of electricity demand and consumption, ultimately aiming to diminish distribution losses and usher in a new era of energy efficiency.
