DISCOMs require regulatory and policy support for healthy finance

We, as industry professionals, have long recognised that the rate at which new laws affecting our business, the electricity sector, have transpired in the last five to six years has been substantially faster than in prior decades. This implies that our central government is determined to improve this sector and is leaving no stone unturned. Legislation is one example. However, before the Energy Conservation Act, there existed an open access restriction of one megawatt, which was decreased to 100 kilowatts. The electricity modification bill 2022, which was debated, has now been referred to a standing committee. The energy rights of consumers regulations 2020, which for the first time focused on the person being serviced, i.e., the customer, their rights to dependable service, and power quality, among others, are some of the efforts made by the government to ensure stability in our power sector.
Furthermore, with announcements relating to green energy and offshore energy, whether they be authorised projects, offshore wind projects, or smart metering in distribution centres, we are seeing a large number of new projects spring up across the energy value chain, with the question being where the revenue coming from.
Therefore, in the next five to six years, we will require significant investment in the transmission and distribution sector, likely in the range of $30 trillion. However, there are some indicators that the industry is evolving: InvIT Tranche plan is in the pipeline, enabling more capital into transmission; green bonds for generating are on the way. There is a Totex board for allocating new investments in metres, etc. However, one issue that will always remain is how much of the excitement and efforts emanating from the centre are shared by the other most significant partner in the value chain, which are state-owned DISCOMs or state governments.
Because power is a simultaneously listed industry, we have distribution and transmission utilities in every state. The electrical sector faces many challenges, but financial concerns remain at the top. The government has implemented many schemes, including the RDSS, to reduce DISCOMs’ financial losses, and we are optimistic about their success.

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