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GoM Meeting Focuses on Distribution Sector Viability & Power Tariff Reforms

Union Minister of State for Power and New & Renewable Energy, Shri Shripad Yesso Naik, chaired the third meeting of the Group of Ministers (GoM) in Lucknow to discuss financial viability challenges in India’s electricity distribution sector. The meeting was attended by state energy ministers, officials from Power Finance Corporation (PFC) Ltd, REC Ltd, and state power utilities.

Key discussions centered around financial restructuring of DISCOM liabilities, reducing interest burdens, and exploring energy storage solutions to lower power purchase costs. The adoption of AI and digital innovations was highlighted as a crucial step to enhance operational efficiency. The meeting also emphasized the importance of cost-reflective and inflation-indexed tariffs to ensure financial sustainability.

States including Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Maharashtra, and Tamil Nadu presented their DISCOM performance reports and provided suggestions for financial reforms. TATA Power Odisha shared best practices for achieving profitability in power distribution.

A key recommendation was to review Net Metering and Renewable Purchase Obligations (RPOs), ensuring fair cost allocation. Delays in government department payments and subsidy disbursements were identified as major financial stressors for DISCOMs, often leading to working capital loans that are not accounted for in tariff structures.

The GoM reaffirmed its commitment to power sector reforms, advocating for privatization initiatives and regulatory adaptability in setting tariffs. The next GoM meeting will include the All India DISCOM Association (AIDA) for further consultation.