PowerPoint Presentation“The viability of Distribution Companies is a serious concern. A
revamped reforms-based result-linked power distribution sector
scheme will be launched with an outlay of INR 3,05,984 crores over 5
years. The scheme will provide assistance to DISCOMS for
Infrastructure creation including pre-paid smart metering and feeder
separation, upgradation of systems, etc., tied to financial
improvements.”
• Improved Quality and Reliability of power supply to consumers
• Financially and operationally efficient distribution sector o Reduce AT&C losses to 12-15% by 2024-25* o Reduce ACS-ARR gaps to zero by 2024-25* o Developing Institutional Capabilities
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*AT&C loss reduction and ACS-ARR gap reduction targets mentioned above are national targets and state-wise targets would depend on their current levels of AT&C losses and ACS-ARR gap
Distinguishing features
• Funding linked to Results/Performance
• Thrust on Smart Metering
• Funds for works leading to o loss reduction and o improvement in quality and reliability of power supply
• Reform measures and works customised to the specific needs of the state
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Scope of the Revamped Distribution Sector Scheme
• Scheme outlay of INR 3,03,758 Cr.; estimated grant from Central Govt of INR 97,631 Cr.
• Revamped Scheme to have 2 key parts:
o Part A - Metering & Distribution Infrastructure works
o Part B - Training & Capacity Building and Other Enabling & Supporting Activities
• All State owned Discoms and State/UT Power Departments (excluding private sector power utilities) eligible for financial assistance under the revamped scheme.
• Ongoing projects under IPDS, DDUGJY and PMDP-2015 (for the erstwhile State of J&K) to be subsumed under the new scheme
o No new projects to be sanctioned under IPDS and DDUGJY
o Sanctioned projects will be eligible to receive funds upto 31st March 2022 in this scheme
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• Discom applications to be approved based on Action Plans and DPRs • The Action Plan will be structured as below:
o Part I - Metering & Distribution Infrastructure Works o Part II - Reform measures for financial viability o Part III - Results, Outcomes and Evaluation
• DPRs (only for Part A of Scheme) will be structured as below: o DPR for Component I –Metering o DPR for Component II, Part I –infrastructure works for loss reduction (50% share) o DPR for Component II, Part II –infrastructure works for network strengthening (50% share)
o Action plan to be formulated by Discoms in consultation with Nodal Agency/ MoP; Plan to be approved by DRC and State Cabinet before submission
o Plan to include the state cabinet decision that If Discom is found ineligible as per the Results Evaluation Framework, the funding gap will be met by the Discom/State Govt.
Action Plan guidelines
Metering Plan to be spelled out, to target 100% metering as per targets below:
• Feeder and DT metering (by June’ 2023) • Agriculture DT metering (by Mar’ 2025) • Prepaid consumer metering (by Mar’ 2025) Plans for other infrastructure works
including: • works targeted at loss reduction • works targeted at system strengthening Priority will be given to works focused on
loss reduction Action plan to broadly include challenges,
targeted infrastructure works and annual capital outlay
Indicative list of works
Action Plan Part I (for loss reduction and network strengthening
through metering and other works)
Root cause analysis of reasons for losses, ACS-ARR gap and other challenges, targeted reform measures, expected results and timelines
This part will lay the road map for bringing down AT&C losses and reducing ACS-ARR gap to zero by 2024-25
Plan to also include the financial support needed from state govt. (subsidy, govt. dues etc.)
Clear mapping of problems and solutions
Activities and reform to be finalized based on operational and financial data (accounts)
Indicative list of reforms
Action plan to include baseline data and annual targets (based on Part I and II plan) across following outcomes :
• Financial Stability (AT&C, ACS-ARR, regulatory assets etc.)
• Supply Reliability (hours of supply, SAIFI, DT failure etc.)
• Infra. works progress (%metering, feeder segregation, AB cabling etc.)
• Structural reforms progress ( training, DBT, energy audit, tariffs etc.)
Base year – FY2019-20 Targets/ parameters to be proposed for
FY2021-22 to FY2025-26 Plan to form basis for Result Evaluation
Framework Indicative framework
Action Plan Part III (results, outcomes and evaluation)
Action Plan Part II (reforms for reduction of losses and ACS- ARR gap and improving Discomviability)
DPR guidelines • DPR for Component I – Metering
o A single DPR may be prepared for all Consumer metering works. o DT and Feeder metering works may be included in the same or submitted separately o Discoms may decide the phasing of implementation based on the cost benefit analysis.
• DPR for Component II, Part I – Infrastructure works for loss reduction o To include works for Armoured Cabling, AB Cables, Feeder Segregation etc
• DPR for Component II, Part II – Infrastructure works for network strengthening o To include works for Augmentation and Renovation & Modernisation of Substations &
lines, new substations and lines etc • DPR to be submitted to Nodal Agency post approval of DRC and in accordance with Action
Plan approved by State Cabinet • The share of project cost for Part I (infra. works for loss reduction) and Part II (infra. works
for network strengthening) shall be 50% each. Loss reduction works will get first priority. • In case the distribution losses are low (less than 12% in the base year), then the DISCOM
may allocate more funds to System Strengthening works, with suitable justification
Scheme Components
Part A Component 1
• 100% Consumer metering (including agri) through prepaid or smart prepaid mode
• Prepaid smart meter tenders initiated after 1st January 2020 in TOTEX mode eligible for funding
• 100% communicable DT & Feeder Metering with AMI to enable energy accounting
• Metering of unmetered feeders and making all feeder meters (new and old) online
• Replace existing non communicable DT meters with communicable AMI integrated meters
• Replacement or fresh DT meter installation in TOTEXmode
Part A Component 2
Targeted at loss reduction (DPR Part I ) • Armored / Aerial bunched Cables in high loss
areas • New feeders, capacitors, etc. for loss reduction • Segregation / Bifurcation of feeders and allied
works • HVDS in high loss areas • Replacement of conductors, which are old/frayed Targeted at network strengthening (DPR Part II) • Augmentation of Substations • IT/OT enablement works, SCADA in all urban
areas • DMS in 100 urban centres with population over
2.75 lakhs • Additional HT lines to improve quality of supply • Other distribution works for system strengthening
Part A Component 3
• Project Management Agency (PMA) shall be appointed by each DISCOM
• Scope for PMA to include: o DPR preparation o Tender documents o Project awarding o Monitoring o Quality assurance o Material inspection o Results evaluation o Other aspect as decided by Discoms
• PMA costs to be restricted to 1% of project cost
• PMA charges above the permitted amount to be borne by respective Discom / State government
Metering Distribution Infra Work Project Management
Results Evaluation Framework
Contours of Results Evaluation Framework
• Results evaluation framework would be formulated based on the agreed upon Action Plan, incorporating result parameters and trajectories
• Base year for setting baseline will be FY2019-20 and trajectories to be set for FY2021-22 to FY2025-26 across various parameters
• Results evaluation framework will be composed of two components: o Pre-qualifying criteria o Result evaluation matrix
• DISCOMs to meet Pre-Qualifying Conditions and score minimum 60 marks on Evaluation Matrix to be eligible for fund release
• Annual evaluation and verification by independent third parties, against targets for individual parameters
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Pre-Qualification Criteria
• Publication of Quarterly un-audited accounts within 60 days of the end of each quarter (45 days from 3rd year onwards)
• Publication of audited annual accounts by end of December (end of September from 3rd year onwards)
• Creation of no new regulatory assets in latest tariff determination cycle
• 100% payment of subsidy for previous year and advance payment of subsidy up to current period by state govt.
• Payment of current dues by all Govt Depts/ Attached Offices/ Local Bodies
• No. of days payable to creditors equal to or less than projected trajectory
• Tariff order for the current year and true up of penultimate year issued and implemented w.e.f. 1st April of current FY
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Base year
(2019-20) values
Evaluation of cumulative improvement from base year upto year under evaluation
Max. marks Target Achievement Score
A.Financial Stability
60
30 AT&C loss % 20 Liquidation of opening arrears of subsidy (Rs. Cr) 15
Liquidation of Govt dept dues(Rs.cr) 10
No. of creditor days and debtor days 20 Unliquidated regulatory assets (% reduction from base value) Total 100 ∑ Score
B. Outcome of infra works
Hours of supply (Rural)
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35 Hours of supply (Urban) 35 SAIFI 20 DT Failure rate 10 Total 100 ∑ Score
• Assessment of prequalified Discoms on results evaluation matrix, • Targets and trajectories agreed as part of Action Plan • Results Evaluation Matrix comprised of four basic categories with KPIs in each:
Results Evaluation Matrix (2/2)
Base year (2019-20)
values
Evaluation of cumulative improvement from base year upto year under evaluation
Max. marks Target Achievement Score
C. Progress of works under Part A
% DT meters
10
50 Feeder Separation 10 AB cable replacement 10 % consumers with prepaid smart meters 10
% govt depts with prepaid smart meters 10 SCADA- 5 ERP 5 Total 100 ∑ Score
D. Policy and Structural Reforms
Training
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10 Corp Governance 10 Tariff reforms 15 DBT 15 Energy audit 20 Consumer rights 10 Adoption of PPP mode 10 Operational Rating 10 Total 100 ∑ Score
Funding and Disbursement
Funding pattern S.No Item Description Quantity Outlay (Rs. Crore) Grant % (Max) Grant (Rs. Crore)
1 Prepaid Smart metering (Consumer, DT, and feeder level)- January 2020 onwards
25 crore 1,50,000 15% (max. Rs.900 per meter for consumer
meters only) 22,500
2 Other costs including (billing modules, data management, data analytics, and support to implementation etc.)
Lumpsum 800 100% 800
Sub-Total: Part A – Funding for Smart metering 1,50,800 23,300
3 Other Infrastructure works (e.g., SCADA, DMS, AB cables, feeder segregation etc.)
1,51,528 60% or 90%* as the case may be 73301
Sub-Total: Part B – Capacity building etc. 1430 100% 1030* Total 3,03,758 97631 *90% for special category states- NE and hill states, J&K, Ladakh, A&N islands, Lakshadweep
• Metering (consumer, feeder and DT) to be carried out in TOTEX mode. Grant for metering is 15%. Remaining 85% costs are expected to be financed through improvement in billing and collections.
• State Government/DISCOM may also provide Budgetary support in TOTEX mode, including in hybrid mode. PPP partner to provide metering services in DBFOOT (Design Build Fund Own Operate & Transfer) or similar modes
• For other works under Part A, counterpart funding is to be provided by the DISCOM/ State Government. DISCOM can raise funds from PFC, REC, Banks and other Financial Institutions including bilateral/ multilaterals
• For PMA appointment, upto 1% of the project cost for both components of Part-A is eligible for 60%/ 90% Grant.
Fund disbursement
Consumer Meter- 15% of the cost per meter (subject to max. Rs.900/ meter)
DT/ Feeder Meter- 15% cost per meter Condition for fund release- • Consumer meter- Demonstration of one
successful bill recharge • DT/ Feeder meter- Successful
communication with server DISCOM can claim the grant funds in
phased manner for every 5% of meters commissioned against total number of meters awarded
Metering
Phase I: 10% advance (10% of 50% of the Distribution Infrastructure) upon DPR Part I approval (5% advance on sanction and 5% on award of works)
Phase II: Based on evaluation in FY2022-23, Discomto be eligible for: • 30%* funding against DPR Part I • 30%* funding against DPR Part II (10% advance on sanction and 20% on
award) Phase III: Based on evaluation in FY2023-24, Discomto be eligible for:
• 60%* of project cost against DPR Part I and II Phase IV: Based on Discom evaluation in FY2024-25, Discomto be eligible for
• 100%* of project cost against DPR Part I and II
Distribution Infrastructure works
• For Distribution infra works, disbursement is subject to Discom qualification based on Action Plan submitted and the Result Evaluation Matrix
• If a Discom is unable to get any fund released by FY26, the initial advance of 10% will have to be refunded • If a Discom achieves the targets as per Action Plan of any previous FY in a subsequent year, then it shall be eligible
for release pertaining to that FY. • PMA grant shall be based on sanction or award cost (whichever is lower) in March every year – 10% as advance in
sanction year, 30% annually for each subsequent year subject to utilization certificates for previous year.
Other key conditions for funding
Key conditions for release of funds:
Execution of Tripartite / Bipartite agreement (required before release of advance) Submission of PMA Report Satisfying all pre-qualification Criteria for the year under evaluation Scoring the eligibility marks in the evaluation against results evaluation matrix for the year under evaluation. Certificate from Discom regarding utilization of grant already released Certificate regarding receipts and expenditure on the project certified by a Chartered Accountant. Physical and financial (grant and counterpart funding) progress report Arrangement for counter-part funding shall be demonstrated (loan/Discom’s resources/State Govt. funding)
Discom can avail loan from any Bank/FI or multilateral financial institutions, at any stage of the project.
The performance of the DISCOMs in the scheme would be considered for any financing out of the scope of this scheme by PFC, REC, Banks/FI’s and Multilateral Development Banks.
Loan sanction term shall also contain a clause that loans prepaid out of GoI grant shall not attract prepayment penalty
Discoms shall submit utilization certificates (UC) for any FY in prescribed format latest by 30th April of succeeding year.
Discoms furnish audited accounts of scheme funding and expenditure for the FY by 30th June of succeeding year
As funding will be through PFMS, utilities shall mandatorily enter details like receipts, expenditures, etc in PFMS portal
Monitoring and Governance mechanisms
Third Party evaluation of Result Evaluation Framework Appropriate third party/parties will be appointed by MOP / Nodal Agency to verify Discom
achievements Niti Aayog will be involved in the process of selection of Independent third parties
Performance Evaluation of the scheme to be carried out by a separate third-party agency Mid-term evaluation of the scheme will be done for FY 2021-22 & FY 2022-23. Post completion evaluation of the scheme will be done at the conclusion of scheme
Quality Assurance The Discomshall be solely responsible & accountable for assuring quality in the scheme works Discomshall formulate a comprehensive Quality Assurance (QA) and Inspection Plan, which will be
integral part of contract with the turnkey contractor or the equipment supplier/ vendor
District Vigilance and Monitoring Committee (DVMC): The implementation of the scheme at district level shall be reviewed periodically during meetings of DVMC.
Governance mechanisms Nodal agencies: PFC and REC shall be the nodal agencies.
Eligible costs: Project cost approved by the Monitoring Committee or actual cost incurred, whichever is less, shall be the eligible cost shall be considered. Cost overrun to be borne by Discoms/ State govt. Project cost shall include all costs except cost of land.
Distribution Reforms Committee (DRC): The DRC shall be chaired by Secretary (Energy). Members of DRC shall be Secretary (Finance), Secretary (Land Revenue) and Secretary (Forest and Environment) or their representatives.
Tripartite agreement: will be signed among the State Government, DISCOM and GoI (or Nodal agency on behalf of GoI) for undertaking and agreeing to their stipulated roles and responsibilities.
The tripartite agreement may also include a provision for securing loan (from NBFCs under GoI) through TPA (Tri-partite Agreement) arrangement among GoI, the State Government and RBI.
Standard Bidding Document: For AMI, SBDs issued by NSGM shall be adopted. For other works, nodal agencies shall issue the SBDs. Discoms can customize SBDs with approval from nodal agencies.
MIS: A web portal shall be developed by the Nodal Agency for submission of Action Plan & DPRs, Results evaluation framework, physical & financial progress, quality reports etc.
Completion of the project: A Project completion certificate, recommended and forwarded by State Energy Department shall be submitted after completion of scheme.
Thank You
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1. Mechanism for prompt payments by Govt. departments 2. Mechanism for ensuring consumption by the subsidized categories is accounted for properly and released to the DISCOM in
advance, credited to the consumer account via DBT 3. Tariff reforms, incl. annual tariff fixation, rationalization of consumer categories, no Regulatory Assets to be created 4. Progression towards cost reflective tariffs, including timely filing of tariff petitions, MYT and timely issuance of tariff orders 5. Preparation of and adherence to a roadmap for funding accumulated and current financial losses and clearance of part or
whole of regulatory assets through tariff or state funding. 6. Corporate Governance reforms, private participation or through CPSUs/JVs of CPSUs 7. Distribution Franchisee arrangements in some areas of DISCOM 8. Setting up electricity police stations in line with the provisions of the Electricity Act, 2003 9. Training and Capacity Building of existing manpower, Creation of IT wing within DISCOM for management of IT/OT services or
engaging knowledge partners / consultants for the same. 10. Laying down, publishing, and reporting of a monthly system of energy audits 11. Compliance of RPO trajectories 12. Publication of quarterly audited/unaudited reports in a standardized format circulated by PFC. Quarterly and Annual Accounts of
DISCOMs need to explicitly include details of subsidy and Govt. Dept. dues. The annual accounts of the previous year would be published by DISCOMs latest by September 30th of the current year.
13. Initiation of performance linked transfer policy for DISCOM staff 14. Any other activity which serves to achieve the objective of the scheme.
Indicative works – Part I of Action Plan
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Other Infrastructure works focussed on loss reduction and network strengthening
1. Augmentation of Substations
2. Provision of Armoured / Aerial bunched Cables (ABC) in high loss areas
3. Segregation / Bifurcation of feeders and other allied works
4. Replacement of conductors, which are old/frayed
5. Additional HT lines to improve quality of supply
6. IT/OT enablement works, Supervisory Control and Data Acquisition (SCADA) in all urban areas; and DMS in 100 urban centres above the population of 2.75 lakhs as per urban census 2011
7. Works like new feeders, capacitors, etc for loss reduction
8. High Voltage Distribution System (HVDS) in high loss areas
9. Distribution Works for system strengthening
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