The Union Budget 2021 on Monday allocated Rs 3.05 lakh crore package to revive power distribution companies (discoms) through a revamped reform scheme. In addition, with an aim to give more powers in the hands of consumers and breaking the monopoly of discoms, the Budget has proposed the introduction of a new framework to give the option to consumers to choose from more than one discoms.
“Discoms are having monopolies. We need to provide competition,” said Finance Minister Nirmala Sitharaman in her Budget speech on February 1. The new revival package will be used as assistance for creating infrastructure creation – including installation of prepaid smart meters, feeder separation, and upgradation. In yet another step towards boosting clean energy initiatives, a Hydrogen Energy Mission will be launched in 2021-22.
The Petroleum and Natural Gas sector, too, saw a series of reform initiatives, including the extension of the Pradhan Mantri Ujjwala Yojana (PMUY) scheme from 8 crore beneficiaries to 9 crore beneficiaries, as an effort to increase the liquefied petroleum gas (LPG) penetration in the country. In addition, city gas distribution networks will be extended to 100 more districts in the next three years.
The Budget also proposed setting up of an independent gas transport system for facilitation and booking of all common carrier pipelines.
The last budget had allocated Rs 15,874.52 crore for the power ministry and Rs 5,753 crore for the ministry of new and renewable energy. The government is also gearing up for a huge reform in the electricity distribution sector. The higher allocation is expected to push the efforts by the government to introduce reform measures like direct benefit transfer of subsidies and help the state electricity distribution companies to tide over the financial crisis.
Showing signs of economic recovery, the country’s power demand has surged in recent weeks. The country’s power consumption grew by 6.1 percent in the month of December, up to 107.3 billion units (BU) in December 2020, up from 101.08 BU during the same month in 2019.
The higher allocation to various schemes like the Integrated Power Development Scheme, targeted at round-the-clock electricity supply, is expected to be a huge boost to the sector. As of now, discoms owe around Rs 95,000 crore to generators, based on government data. After the outbreak of COVID-19, the government had lined up Rs 1.2 lakh crore liquidity assistance program for power distribution firms.
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