The 12 states that have signed up for Ujwal Discom Assurance Yojana (UDAY) have issued bonds totalling Rs 1.83 lakh crore. The bonds issued have helped service 83 per cent of the cumulative debt of the state-owned discoms.
Rajasthan, which has the highest exposure of the discoms’ debt, issued bonds worth Rs 70,525 crore, which is 91 per cent of their debt. Haryana has issued bonds worth Rs 25,000 crore till November 2016. The aggregate technical & commercial (AT&C) losses of the state continue to be high at 28.8 per cent. Jammu & Kashmir the highest AT&C losses at 71 per cent, followed by Bihar at 47 per cent. A high percentage of AT&C losses depicts weak commercial operations and low revenue generation.
Uttar Pradesh (UP), which was the first state to issue bonds in the last financial year, has not shared updated data. Untill July last year, it had issued bonds of Rs 24,000 crore. UP, Rajasthan and Haryana are top defaulters in terms of the high amount of debt. Haryana's AT&C loss is 29.7 per cent and UP's is above 30 per cent.
State-owned discoms cumulatively own a debt of Rs 4 lakh crore. The government is expecting 90 per cent of the cumulative discoms’ debt as bonds by end of this financial year. The rate of interest was in the range of 8.58 per cent to 8.21 per cent, varying from state to state.
For states that sign up for UDAY, one of the first steps was to take over 75 per cent of discom debt as on September 30, 2015 over two years – 50 per cent in 2015-16 and 25 per cent in 2016-17. These states would, then, issue bonds in market to capitalise on it. The 25 per cent of debt remaining with discoms was issued separately by discoms with sovereign guarantee.
States that signed up during 2015-16 were supposed to take over 50 per cent debt by the last financial year and the balance by March 2016. In a later Cabinet decision, those which joined later were allowed to issue bonds against 50 per cent debt last year and carry forward 25 per cent to 2017-18.
According to the terms of UDAY, the debt takeover by states during the first year of UDAY implementation would not be counted in their fiscal limit, thereby keeping the states in the Fiscal Responsibility and Budget Management limits.
The scheme envisages a slew measures to improve operational efficiency. Major targets include reducing AT&C losses from current levels to 15 per cent by 2019. Also, improving collection and billing efficiency, considerably reducing energy theft, reducing the gap between average cost of supply and average revenue realised of discoms are also part of the targets. The scheme underlines the need of regular tariff revision and keeping power prices affordable. Once signed, the states will also enjoy rationalised coal supply and central finance assistance.
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