The Ministry of Power has issued an advisory to all Central Ministries of the government to direct organisations under their administrative control to ensure they switch over to Prepaid Smart Meters on priority.

As part of the same process, the ministries have also been asked to issue all enabling orders in this regard.

This follows a clarification issued by the Ministry of Finance enabling all Central Ministries and Central Departments to make advance payments for pre-paid metered electricity without insisting on any Bank Guarantees, while at the same time ensuring proper accounting arrangements.

Prepaid Smart metering in all Government departments would go a long way in ensuring the commitment of the government in bringing DISCOMs back on the path of financial sustainability, promotion of energy efficiency.

It would also serve as a model for emulation by states for defining similar mechanisms that support prepayment of the electricity dues by their own Departments.

DISCOMs are often termed as the most important, but the weakest link in the power sector value chain, as their poor financial health at the bottom of the value chain has far-reaching negative impacts upstream.

Apart from the operational inefficiencies that cause financial losses, mounting electricity dues of the Government Departments, including the Central & State Governments; Urban & Rural Local bodies; and Government Boards and Corporations due to delayed and inadequate payments for electricity usage also causes cash flow distress in DISCOMs.

The interest burden on the additional working capital availed by DISCOMs to tide over the shortfalls further creates inflationary pressure on their costs, thereby placing further stress on their viability.

Estimates obtained from the States suggest the outstanding Government department dues to be Rs 48,664 crore at the end of FY2020-21, a value that is a colossal 9 per cent of the annual power sector turnover.

To improve the operational efficiency and financial sustainability of the Distribution sector, the Central government has approved the Revamped Distribution Sector Scheme – A Reforms-Based and Results-Linked Scheme. The Scheme seeks to transform the existing DISCOMs into making them operationally efficient and financially sustainable.

One of the interventions under the Scheme is the plan to install prepaid Smart meters to all electricity consumers except agricultural consumers in a phased manner for which almost half of the Scheme outlay has been committed.

Priority has been accorded to the prepaid Smart meter installation in all the Government Departments including those of the Central & State Governments; Urban & Rural Local bodies; and Government Boards and Corporations with a view to ensure that the Government departments properly budget and pay for the electricity services as and when used.