Vinod Bhat
Union Minister of State for Power and New & Renewable Energy Shri Shripad Yesso Naik chaired the third meeting of the Group of Ministers (GoM) constituted to address issues related to the viability of electricity distribution utilities in Lucknow today.
Among those in attendance were Shri A. K. Sharma, Energy Minister of Uttar Pradesh; Shri Gottipati Ravi Kumar, Energy Minister of Andhra Pradesh; Shri Pradyuman Singh Tomar, Energy Minister of Madhya Pradesh; Smt. Meghana Sakore Bordikar, Minister of State for Energy in Maharashtra; and Shri Somendra Tomar, Minister of State for Energy in Uttar Pradesh. The meeting also included senior officials from the Central Government, State Governments, State Power Utilities, Power Finance Corporation (PFC) Ltd, and REC Ltd.
In his opening remarks, the Union Minister welcomed the Energy Ministers from the Member States and expressed gratitude to the Energy Minister of Uttar Pradesh for hosting the meeting. He highlighted discussions from the first two meetings of the GoM and emphasized the collective efforts required from Member States to improve the power distribution sector. He called for the design of a mechanism for the financial restructuring of distribution utilities’ liabilities, aimed at reducing the interest burden and developing storage solutions. He also urged for facilitating daytime power supply for agriculture to lower overall power purchase costs and reduce subsidy burdens.
The Hon’ble Minister underscored the need to implement AI and digital innovations to ensure cost-reflective tariffs for the financial viability of the power sector, stating that these measures would enhance the financial sustainability of utilities. He also emphasized the need for a scheme similar to UDAY.
The Energy Minister of Uttar Pradesh expressed gratitude to the Union Minister for holding the third meeting of the GoM in Lucknow and highlighted the state’s achievements in the power sector, including the adoption of renewable energy technologies. He remarked that the measures taken by the Government of India would have a far-reaching impact on strengthening the country’s distribution sector. The Hon’ble Minister emphasized the need for rapid growth in renewable energy sources coupled with energy storage solutions to meet future challenges related to energy transition and increasing power demand. He also mentioned the importance of the Government of India’s role in developing human resources to achieve better outcomes.
The Joint Secretary (Distribution) from the Ministry of Power presented key areas of intervention identified during the first two meetings of the GoM and proposed measures for stakeholders—including the Central Government, State Governments, and Regulatory Commissions—to address viability concerns.
TATA Power Distribution from Odisha, as a special invitee, shared best practices adopted and their journey toward achieving profitability in their distribution companies (DISCOMs).
Member States actively participated in the meeting, providing an overview of their State DISCOMs and valuable suggestions for improving financial conditions. Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Maharashtra, and Tamil Nadu made presentations on the subject.
The contours of an action plan identifying methods to reduce outstanding debts and losses of distribution utilities and strategies to bring them into profitability were discussed in detail. The group placed emphasis on reviewing regulators’ performance in tariff determination and suggested support from the Government of India for privatization initiatives by the states. It was also discussed that regulators must adapt to the latest developments in the sector, including current renewable energy integration levels and the requirements for capacity building and operation and maintenance (O&M) costs when finalizing tariffs.
Delays in payments of dues and subsidies from government departments were noted as forcing DISCOMs to resort to working capital loans, which are not accounted for in tariffs. Additionally, delays in passing on Fuel and Power Purchase Cost Adjustments in tariffs were discussed, which create a need for working capital not considered in the Annual Revenue Requirements of utilities. To avoid future tariff shocks, it was suggested to link tariffs to annual inflation-indexed increases.
The Group of Ministers reiterated its commitment and resolve to take necessary measures to enhance the financial viability of DISCOMs.
In his closing remarks, the Hon’ble Union Minister of State emphasized the necessity for states to demonstrate greater political will and determination to make the power sector viable. He urged member states to act upon the ideas generated during the meeting and recommended inviting the All India DISCOM Association (AIDA) to the next GoM meeting for their suggestions.
It was unanimously decided to hold the fourth meeting of the GoM in Andhra Pradesh in April.
