MoP issues Revamped Distribution Sector Scheme

  • Ministry of Power (MoP) on July 22, 2021, has notified the Revamped Distribution Sector Scheme, a result based scheme with the objective of improving the quality and reliability of power supply to consumers through a financially sustainable and operationally efficient sector (Scheme). The scheme has an outlay of INR 3,03,758 crore with a gross budgetary support of INR 97,631 crore from the Government of India. The Scheme seeks to improve the operational efficiencies and financial sustainability of all distribution companies (DISCOMs)/Power Departments, excluding private sector distribution companies, by providing conditional financial assistance to DISCOMs for strengthening of supply infrastructure. The assistance will be based on meeting pre-qualifying criteria as well as upon achievement of basic minimum benchmarks by the DISCOM evaluated on the basis of agreed evaluation framework tied to financial improvements. Implementation of the Scheme would be based on the action plan worked out for each state rather than a 'one-size-fits-all' approach.
  • The Scheme aims to improve operational efficiencies and financial sustainability, by providing result-linked financial assistance to DISCOMs for strengthening of supply infrastructure based on meeting pre-qualifying criteria and achieving basic minimum benchmarks. The Scheme would be available till the year 2025- 26. REC and PFC have been nominated as nodal agencies for facilitating implementation of the Scheme.
  • Key objectives of the Scheme:
    • Reduction of AT&C losses to pan-India levels of 12-15% by 2024-25.
    • Reduction of ACS-ARR gap to zero by 2024-25.
    • Developing Institutional Capabilities for Modern DISCOMs
    • Improvement in the quality, reliability, and affordability of power supply to consumers through a financially sustainable and operationally efficient Distribution Sector.
  • Major components of the Scheme:
    • Consumer Meters and System Meters
      • Prepaid Smart Meters for all consumers except Agricultural consumers
      • 25 crore consumers to be covered under prepaid Smart Metering
      • Prioritizing the urban areas, UTs, AMRUT cities and High Loss areas for prepaid Smart metering i.e., 10 crore prepaid smart meter installation by 2023, the balance to be taken up in phases
      • Communicable AMI meters proposed for all Feeders and Distribution Transformers to enable energy accounting, leading to better planning for loss reduction by DISCOMs
      • Installing prepaid Smart Meters should help DISCOMs in improving of their operational efficiencies and strengthen DISCOMs to provide better service to consumers
    • Feeder Segregation
      • The Scheme focuses on funding for feeder segregation for unsegregated feeders, which would enable solarization under KUSUM scheme
      • Solarization of feeders will lead to cheap/free day time power for irrigation and additional income for the farmers
    • Modernization of Distribution system in urban areas
      • Supervisory Control and Data Acquisition (SCADA) in all urban areas
      • DMS in 100 urban centers with population over 2.75 lakhs
      • Rural and urban area system strengthening
  • Provision for Special Category States
    • All Special Category States including North-Eastern States of Sikkim and States/Union Territories of Jammu & Kashmir, Ladakh, Himachal Pradesh, Uttarakhand, Andaman & Nicobar Islands, and Lakshadweep will be treated as Special Category States.
    • For Prepaid Smart Metering, grant of INR 900 or 15% of the cost per consumer meter worked out for the whole project, whichever is lower, shall be available for 'Other than Special Category' states. For 'Special Category' states, the corresponding grant would be INR 1350 or 22.5% of the cost per consumer, whichever is lower. In addition, the DISCOMs can also avail of an additional special incentive of 50% of the aforementioned grants if they install the targeted number of Smart meters by December 2023.
    • For works other than Smart Metering, maximum financial assistance given to DISCOMs of 'Other than Special Category' States will be 60% of the approved cost, while for the DISCOMs in Special Category States, the maximum financial assistance will be 90% of the approved cost.

MoP issues revised guidelines and SBDs for procurement of ISTS through TBCB

  • MoP on August 06, 2021 has released the revised Standard Bid Documents (SBDs), containing Request for Proposal (RfP) and Transmission Service Agreement (TSA) for award of Inter-State Transmission System (ISTS) Projects on Tariff Based Competitive Bidding (TBCB).
  • These guidelines aim at laying down a transparent procedure for facilitating competition in the transmission sector through wide participation in providing transmission services and tariff determination through a process of tariff-based competitive bidding. Based on extensive stakeholders' consultation, revised SBDs for award of ISTS system on TBCB have been prepared. Some of the salient provisions of the revised SBDs are:
    • The Transmission Service Agreement (TSA) with the selected bidder will now be signed by CTU, instead of the Long-Term Transmission Customers (LTTCs). In the past, bidding process for ISTS projects could not be completed in time due to non-signing of TSA by LTTCs and this provision would help in timely completion of bidding process.
    • In line with best practices available in other infrastructure sector, provision of Independent Engineer during construction phase has been included in the SBDs for monitoring, quality assurance and quantification of cost/time related issues. These would help in reducing number of disputes as well as appropriate risk sharing.
    • Completion of many transmission lines is found delayed due to not so precise line route survey handed over to the bidders during bidding process. As a result, many a times, bidders used to do their own survey before submitting their bids. Provision has been made for preparation of transmission line route survey in advance, to ensure better accuracy of transmission line route survey. As a result, the need for having transmission line route survey carried by each bidder would be obviated and as well as bidders would be aware of all issues involved in construction of the lines before the bidding.
    • In the earlier SBDs, it was stipulated that the entire bidding process needs to be completed within 145 days from date of initiation of bidding process. The time of completion of bidding process has been reduced to 91 days in the revised SBDs. Further, it has been stipulated that entire bidding process shall be completed online in a transparent manner.
    • In order to enhance competition, EPC contractors having adequate experience of developing infrastructure projects have been allowed to participate in the bidding subject to meeting net worth requirement and other criteria as per SBDs.
    • Provisions relating to change in law, termination and consequential payments have been changed to bring more clarity and to reduce risk perception to the bidders.
    • In order to bring more clarity to developer on status of TBCB assets after expiry of contract period of 35 years, the mode of execution of ISTS project has been changed from Build-Own-Operate-Maintain (BOOM) to Build-Own-Operate-Transfer (BOOT).
    • To promote ease of doing business, bidders will now be required to quote one transmission tariff for the actual TSA period.
  • It is envisaged that the Revised SBD would promote ease of doing business for private developers in transmission sector, address concerns of developers on risk sharing, encourage competition in transmission, and facilitate timely completion of transmission lines.

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