Odisha eyes operational pact under UDAY

State was keen to implement UDAY through Gridco but it got disqualified

As Odisha was not eligible to avail  itself of financial incentives under the Centre's Ujjwal Discom Assurance Yojana (UDAY), it is looking to sign an operational memorandum of understanding (MoU) with the Government of India. The state government was keen to implement the scheme through its power purchase firm — Gridco Ltd. But Gridco being neither a discom nor a holding company, hence it got disqualified.

The state government feels that even an operational agreement would help improve technical parameters of its ailing electricity distribution (discom) companies.

Currently, Gridco is managing the operations of three discoms after the state power regulator revoked the license of Reliance Infra for lacklustre performance.

"For the UDAY scheme, we are looking to execute an operational MoU. The operational pact has several components like Smart metering and other energy efficient measures which will improve the functioning of discoms. Our discoms after included under UDAY would also be eligible for credit ratings", said Hemant Sharma, secretary, energy (Odisha) and chairman cum managing director of Gridco Ltd.

Operational efficiency improvements like compulsory smart metering, upgradation of transformers, meters, energy efficiency measures like efficient LED bulbs, agricultural pumps, fans and air-conditioners as envisaged in the UDAY scheme promise to reduce the average AT&C (aggregate technical & commercial) loss. It is also seen as reducing the gap between Average Revenue Realized (ARR) and Average Cost of Supply (ACS) by 2018-19.

The Odisha government, through Gridco, owns 49 per cent stake in the four discoms — Central Electricity Supply Utility of Odisha Ltd (Cesu), North Eastern Electricity Supply Company of Odisha Ltd (Nesco), Western Electricity Supply Company of Odisha Ltd (Wesco) and Southern Electricity Supply Company of Odisha Ltd (Southco). Gridco has been entrusted with the management of Nesco, Wesco and Southco after the state power regulator Odisha Electricity Regulatory Commission (OERC) scrapped their licenses over unsatisfactory performance and failure to contain steep AT&C losses.

The state government had earlier demanded to facilitate implementation of UDAY scheme in Odisha, the loans of Gridco be converted into bonds instead of the loans of discoms. The proposal, however, was not acceptable to the Union government.

UDAY assures the rise of vibrant and efficient discoms through a permanent resolution of past as well as potential future issues of the sector. It empowers discoms with the opportunity to break even in the next two to three years. This can be achieved through four initiatives- improving operational efficiencies of discoms, reduction of cost of power, reduction in interest cost of discoms and enforcing fiscal discipline on discoms through alignment with state finances.

Odisha is one of the very few states to have been left out of the UDAY scheme.