 "Government moots stringent evaluation for power discoms")
In a major boost for UDAY, the Centre’s reform scheme for ailing power distribution companies, Uttar Pradesh, which is ruled by a non-Bharatiya Janata Party government, has joined the scheme.
Piyush Goyal, Union minister of state for coal, power and renewable energy, announced this on a social networking site. “It’s a SuryaUday (sunrise) for the 20 crore+ people of Uttar Pradesh as the state joins UDAY (Ujwal Discom Assurance Yojana),” Goyal tweeted from his verified account.
In a follow-on tweet, Goyal congratulated Samajwadi Party leader and UP chief minister Akhilesh Yadav for leading his Cabinet in paving the way for the crucial power sector reform.
UP is the twelfth state to join UDAY after Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Gujarat, Haryana, Madhya Pradesh and Chhattisgarh.
India’s most populous state is powered by near-bankrupt discoms. Top four debt-ridden discoms in the country are Rajasthan, Rs 85,000 crore arrears, Tamil Nadu, Rs 70,000 crore arrears, UP, Rs 32,000 crore arrears, and Haryana, Rs 10,000 crore arrears.
With UP on board, around 40 per cent of debt on India’s power discoms is set to undergo major restructuring. Among the worst performing states, only Tamil Nadu is yet to join the scheme.
UP government officials have welcomed the reform plan and said they would soon initiate the process of taking over discoms’ debt. Senior officials in the state’s energy department said an external monitoring agency will be set up to ensure that MoU with the Centre is honoured in letter and spirit. “This will help us take corrective measures and restructure power distribution as per the plan,” said an official on request of anonymity.
The first step of UDAY is taking over discoms’ debt by the respective state government. The discoms collectively owe Rs 4.3 lakh crore to financial institutions. The plan, designed by the Centre and open to all states, would be implemented through a memorandum of agreement with the state governments and the respective discoms.
States are suggested 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. The state will issue bonds for the same. For the next two financial years, the Centre will not include the debt taken over by the states in the calculation of their fiscal deficit. The Union power ministry said except two or three states, none would breach their fiscal deficit limits after taking over the debt.
BJP-ruled Rajasthan has already initiated reforms including tariff hike, technical improvements and creation of separate power distribution companies.
Under UDAY, the discoms would have to reduce their Aggregate Technical & Commercial Losses (AT&C) to 15 per cent from current level by 2018-19. Among other provisions to improve last-mile power transmission and distribution are 100 per cent metering, feeder separation for agricultural populace and procurement from cheaper sources.
The difference between average revenue realisation and average cost of procurement would have to be brought down to zero by 2018-19. The State Electricity Regulatory Commissions (SERCs) will also have to revise tariffs on quarterly basis.
SURYA’UDAY’ FOR UP
Piyush Goyal, Union minister of state for coal, power and renewable energy, announced this on a social networking site. “It’s a SuryaUday (sunrise) for the 20 crore+ people of Uttar Pradesh as the state joins UDAY (Ujwal Discom Assurance Yojana),” Goyal tweeted from his verified account.
In a follow-on tweet, Goyal congratulated Samajwadi Party leader and UP chief minister Akhilesh Yadav for leading his Cabinet in paving the way for the crucial power sector reform.
UP is the twelfth state to join UDAY after Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Gujarat, Haryana, Madhya Pradesh and Chhattisgarh.
India’s most populous state is powered by near-bankrupt discoms. Top four debt-ridden discoms in the country are Rajasthan, Rs 85,000 crore arrears, Tamil Nadu, Rs 70,000 crore arrears, UP, Rs 32,000 crore arrears, and Haryana, Rs 10,000 crore arrears.
With UP on board, around 40 per cent of debt on India’s power discoms is set to undergo major restructuring. Among the worst performing states, only Tamil Nadu is yet to join the scheme.
UP government officials have welcomed the reform plan and said they would soon initiate the process of taking over discoms’ debt. Senior officials in the state’s energy department said an external monitoring agency will be set up to ensure that MoU with the Centre is honoured in letter and spirit. “This will help us take corrective measures and restructure power distribution as per the plan,” said an official on request of anonymity.
The first step of UDAY is taking over discoms’ debt by the respective state government. The discoms collectively owe Rs 4.3 lakh crore to financial institutions. The plan, designed by the Centre and open to all states, would be implemented through a memorandum of agreement with the state governments and the respective discoms.
States are suggested 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. The state will issue bonds for the same. For the next two financial years, the Centre will not include the debt taken over by the states in the calculation of their fiscal deficit. The Union power ministry said except two or three states, none would breach their fiscal deficit limits after taking over the debt.
BJP-ruled Rajasthan has already initiated reforms including tariff hike, technical improvements and creation of separate power distribution companies.
Under UDAY, the discoms would have to reduce their Aggregate Technical & Commercial Losses (AT&C) to 15 per cent from current level by 2018-19. Among other provisions to improve last-mile power transmission and distribution are 100 per cent metering, feeder separation for agricultural populace and procurement from cheaper sources.
The difference between average revenue realisation and average cost of procurement would have to be brought down to zero by 2018-19. The State Electricity Regulatory Commissions (SERCs) will also have to revise tariffs on quarterly basis.
SURYA’UDAY’ FOR UP
- State Cabinet of UP approves its participation in Ujawal Discom Reforms Yojana (UDAY)
- It is the 12th state to join in the past one month. Others are Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Gujarat, Haryana, Madhya Pradesh and Chhattisgarh
- UP discoms have accumulated debt of Rs 32,000 cr
- Total debt: Rs 4 lakh cr (as on August 2014)
- With eight states, around 40% of discom debt is under restructuring now
- Annual increase in discom losses: Rs 60,000 cr
- Average AT&C losses: 27 per cent of the power supply
