Govt set up GoM on viability of electricity distribution utilities

The Government of India has set up a Group of Ministers to address issues related to the viability of the electricity distribution utilities in the country. The first meeting of the Group of Ministers was held virtually recently. The meeting was attended by the Energy Minister of the Central government, States, and officials of the Central and State Governments. The officials of the Power Finance Corporation Ltd also attended the meeting.

Chairperson of the Group of Minister 

Union Minister of State for Power and New and Renewable Energy, Shripad Yesso Naik, is the Chairman of the Group of Ministers.

Members of the Group of Minister 

• Apart from the Central government, the Group of Ministers includes Energy Ministers of five key States -Uttar Pradesh, Andhra Pradesh, Rajasthan, Tamil Nadu, Madhya Pradesh, and Maharashtra.
• Uttar Pradesh Energy Minister Arvind Kumar Sharma is the convenor of the Group of Ministers.

Terms of Reference for the Group of Minister 

The Group of Ministers will analyze and make recommendations to the government on the following issues.

• Analyze the debt of the Electricity distribution boards in key states of India.
• Identify parameters that need to be monitored to ensure borrowings by electricity distribution utilities are productive.
• Identify States that are in urgent need of liquidity support (cash) and suggest a fiscal discipline program to enable them to avoid a debt trap.
• Recommend guidelines for investment plans concerning capital expenditure targeted at overall improvement.
• Suggest measures for improvement in the overall health of the electricity distribution sector to attract further investment from private participants.

Losses suffered by Electricity Distribution Utilities

The electricity distribution utilities suffer losses during the distribution of the electricity. Distribution of electricity refers to the electricity that is supplied to the end consumer (home/shops/factories). It excludes losses incurred during the transmission of electricity. 

Some of the main reasons for losses are:

• Power Theft
• Metering Inaccuracies due to the use of old technology-based meters.
• Supply of free or at a highly subsidised price of electricity to agricultural sectors
• Faulty billings.