Telangana joins UDAY scheme, discoms to get Rs 890 cr interest relief

Under UDAY scheme, state govt will take over 75% of the discoms' total debt of Rs 11,897 cr

Telangana state has joined the Ujwal Discom Assurance Yojana (UDAY) scheme by signing an MoU with the Centre on Wednesday. Chief Minister K Chandrasekhar Rao said the move will provide a relief from interest burden to an extent of Rs 890 crore a year to the two discoms in the state.

Under UDAY scheme, the state government will take over 75 per cent of the discoms' total debt of Rs 11,897 crore and the remaining Rs 2,974 crore will be restructured with favourable repayment terms.

Also the debt portion taken over by the government will not be taken into account in calculation of the fiscal deficit parameters of the state under the Fiscal Responsibility and Budget Management (FRBM) Act.

"To relieve the financial burden of the distribution companies and consumers, the state has decided to join the UDAY scheme launched by tje Government of India. The two discoms in the state are having a long term debt of Rs 11,897 crore as on September 2015 and are virtually in the debt trap," the Chief Minister said.

Launched in November 2015, the UDAY scheme envisages a comprehensive turnaround of dscoms through improvement in operational efficiencies, reduction in cost of power, reduction in interest rates and by attaining financial discipline.

Besides coming out of the debt burden, the discoms will also be able to raise funds with competitive rates from the financial institutions towards future requirements.

The state government said it was able to achieve a paradigm shift in the power supply situation from the days of perennial power shortages in the undivided Andhra Pradesh.

To further strengthen the position and also to become a power surplus state, it will be getting 1000 MW of power from Chattishgarh from April 2017 onwards, the government said. The TSGenco is also putting up an additional 5,880 MW of thermal capacity with an investment of Rs 37,600 crore for which financial closure was achieved.