Centre's UDAY scheme a success; power distribution system revived

Ujwal DISCOM Assurance Yojana (UDAY) scheme for power distribution companies (DISCOMs) was launched by the Indian Government to reduce the sector's financial issues.

It was announced by the Minister of State for Power, Coal, and New & Renewable Energy Piyush Goyal in Nov'15.

It comprises of four initiatives for the DISCOMs: improving operational efficiencies, power cost reduction, interest cost reduction, and enforcing financial discipline.

States take over 75% of the DISCOMs' debt as on 30 Sep'15 for a two-year-period, 50% in 2015-16, and 25% in 2016-17.

States issue non-Statutory Liquidity Ratio bonds, including State Development Loan bonds, against the debt in the market/directly to financial institutions.

States meeting operational milestones are given priority/additional funding through various government schemes; states not meeting milestones are liable to forfeit such grants.

Ujwal DISCOM Assurance Yojana (UDAY), the Centre's distribution utility revival scheme, has been a success.

Officials said operational losses have decreased as even those states that are chronically inefficient have reduced the gap between the cost and revenue, minimized unmetered power supply, and are coming out with bond issues in ten days.

They said the power distribution system had shown clear signs of revival.

According to officials, 16 states are a part of UDAY; at least eight of them have reduced the difference between average power supply cost and average realization cost.

Distribution companies in UP are reportedly going to launch Rs.5000-crore worth, state government-guarantee-backed bond issues from 6 Oct'16.

Also, Rajasthan distribution companies are likely to increase working capital funds by launching bond issues in ten days.

According to the Power Ministry's data compiled to launch a mobile app for monitoring the UDAY implementation, 13 of the 16 states filed tariff-revision petitions for 2016-17.

The app and website will have data provided by 16 states on 14 financial and operational parameters.

The app would rate the state power distribution systems on the progress made by them against their commitments under UDAY.

Bihar, Gujarat, Haryana, Punjab, and Rajasthan fulfilled 30-45% of their commitments under UDAY.

Bihar, Jharkhand, and UP need improvement with less than 30% progress to fulfill their promises.

J&K fulfilled only 15% of its promises; Karnataka and Punjab incurred losses.

Revenue shortfall of Andhra Pradesh, Bihar, Jharkhand, Rajasthan, and Uttarakhand reduced; aggregate commercial and technical electricity losses (unmetered distribution) decreased in 13 states.