The Ministry of Power is working on changes to contain the cost of power purchase across the country.

“The Ujjwal Discom Assurance Yojana (UDAY) has brought the focus of Power Distribution Companies (Discoms) back on the power purchase costs, which are around 80 per cent of their annual costs. In 2016-17 and 2017-18, the inflationary pressures of increased power costs have been largely contained due to the coal reforms, generation efficiency improvements, as well as adherence to merit order dispatches,” a Power Ministry official said.

“Against an annual increase of 7.7 per cent in power purchase costs in the pre-UDAY period of 2015-16, in 2016-17, the cost increase was only 1 per cent. In 2017-18, the costs reduced by 0.7 per cent absorbing the inflation. Since these were one-time measures, power purchase costs have now increased by 5 per cent in the first nine months of 2018-19. The Government is keenly looking at further structural changes in the power purchase transactions so that the cost of power can be contained at acceptable levels,” the official added. Reacting to concerns regarding the health of Discoms, the official said, “ Some concerns have been expressed regarding the payables positions of the Discoms. While there has been an increasing trend in the outstanding payables, this has to be seen in the context of the increased power off-takes.”

“A bigger concern today is a lasting solution to the receivables problems of Discoms from bulk consumers such as local bodies and State government departments, which are unable to factor in electricity payments through their budgets. These receivables of Discoms are almost one-and-a-half times their outstanding payables to gencos. The government is looking at options to insulate Discoms from these commercial issues,” the official said.

“This includes installation of solar panels and installation of prepaid meters on government buildings. Further, with the KUSUM scheme solarising the agricultural feeders, State government resources for subsidising agricultural electricity are likely to get freed up for electricity payments by the State government departments,” the official added.

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