Andhra undertakes power reforms

Andhra undertakes power reforms

Andhra Pradesh became the second state after Madhya Pradesh to undertake the power sector reforms stipulated by the Department of Expenditure (DoE), Ministry of Finance (MoF) and has been granted permission to mobilise Rs 9,190 crore for undertaking reforms in four citizen-centric areas.

Starting from September 2020, the state has started Direct Benefit Transfer (DBT) of electricity subsidy to farmers, as part of the reforms. The state successfully implemented one of the three stipulated reforms in the power sector.

Power sector reforms stipulated by the MoF aim to create a transparent and hassle-free provision of power subsidy to farmers and prevent any leakages. The reforms also aim to improve the health of power distribution companies by alleviating their liquidity stress in a sustainable manner.

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The power sector reforms include:

  1. Implementation of the direct benefit transfer (DBT) scheme in the electricity sector for better targeting of subsidies
  2. Promoting retail competition and instilling financial discipline among state-owned electricity distribution companies (discoms)
  3. Liquidity infusion of up to Rs 90,000 crore to help discoms service overdue payments

Successful implementation of the reform has made Andhra Pradesh eligible to mobilise additional financial resources equivalent to 0.15% of its Gross State Domestic Product (GSDP). Accordingly, the DoE granted permission to the state to raise additional borrowing of Rs 1,515 crore.

Madhya Pradesh has also undertaken power sector reforms. Accordingly, the state was given permission for additional borrowing of Rs 1,423 crore, equivalent to 0.15% of its GSDP between January 2020-21.

Previously, a memorandum of understanding (MoU) was signed between the Ministry of Power (MoP), Government of India and Gujarat Government to affirm the joint commitment of the parties to reform the power sector in Gujarat and to set out the reform measures of Gujarat under the Accelerated Power Development Program (APDP) of Government of India.

Also read: Under-Rs 2.50 bids mark Andhra’s ambitious solar plants

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