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Govt's proposed discom scheme positive measure for the power sector

ICRA Vice President and Sector Head Girishkumar Kadam said the availability of grants was not an earlier part of the UDAY scheme. Nonetheless, timely implementation of such capex and the proactive focus by state discoms is critical, given that the scheme is result-oriented and subject to performance, he said.

ET Bureau|
Last Updated: Jan 16, 2020, 08.09 PM IST
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New Delhi: The government’s new scheme to grant over Rs 1.1 lakh crore to state power distribution companies (discoms) is a positive measure for the power sector, given the availability of grants for infrastructure upgradation and the chance to improve the operational efficiency of the discoms, ratings firms, ICRA Vice President and Sector Head Girishkumar Kadam said reacting to an ET report.

The availability of grants was not an earlier part of the UDAY scheme, he said in a statement said.

Nonetheless, timely implementation of such capex and the proactive focus by state discoms is critical, given that the scheme is result-oriented and subject to performance, he said.

This apart, both the tariff adequacy and adequate subsidy release from the respective state governments towards the discoms remain critical for ensuring a sustainable improvement in the financial position of discoms, he said.

ET had on Wednesday said the government plans a grant of over Rs 1.1 lakh crore to state power distribution companies under a new bailout scheme that would mandate discoms with high losses to either privatise operations or appoint distribution franchisees and invest in infrastructure upgradation.

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