States line up to join centre's Uday Scheme for power distribution cos

NEW DELHI: States with financially sound power distribution companies and undivided electricity departments are lining up to be part of the Centre's Ujwal Discom Assurance Yojana ( Uday) for incentives like concessional coal, power and finance that reduce costs. Gujarat and Madhya Pradesh, whose distribution companies do not have accumulated loans, have evinced interest in joining the scheme along with 10 states which do not have separate power distribution firms, a senior government official said.

Rajasthan, Chhattisgarh and Jharkhand have signed agreements with the Union power ministry to be part of the scheme, while Uttar Pradesh, Bihar and Haryana too will be signing similar memoranda of understanding. A dozen other states have conveyed their in-principle approvals to be part of the scheme.

"We have received interest from Madhya Pradesh and Gujarat for Uday. Madhya Pradesh has three power distribution firms and Gujarat has four. These distribution companies do not have financial problems, but are looking at other incentives that can reduce their costs and avoid tariff hikes," the official said. Goa, Daman & Diu, Jammu & Kashmir, Puducherry, Arunachal Pradesh, Nagaland, Manipur, Mizoram and Sikkim, which do not have unbundled power departments, are among the provinces that have expressed their interest to participate.


"The debt of these bundled distribution companies is the debt of the state governments, so there is no requirement of financial rejig. The states want to be part of Uday to derive operational benefits," the official said. Rajasthan on Wednesday became part of the debt recast scheme and is expected to receive benefits of Rs 21,000 crore in the next three years, Power Minister Piyush Goyal said.

"The debt got accumulated due to gross mismanagement over five years of Ashok Gehlot-led Congress government. The discoms were run to the ground," Goyal said.

Rajasthan’s discoms have debt of Rs 80,500 crore and are expected to save Rs 7,000 crore interest cost annually as the state government takes over 75 per cent of the debt as part of Uday. The Rajasthan government will take over Rs 60,500 crore of the debt on the books of the electricity distribution utilities. For the remaining Rs 20,000 crore, state-guaranteed discom bonds will be issued at coupon rates of around 3 per cent lower than the average existing interest rate. As per the MoU, the three power distribution companies of Rajasthan will have to curb commercial losses to 15 per cent and transmission losses to 3.5 per cent, upgrade technology and deploy energy efficient equipment. Reduction in transmission losses is expected bring Rs 7,300 crore revenue until fiscal 2019 and usage of energy efficient appliances reduce costs by Rs 2,000 crore in the same period.