In 2015, Minister of State (IC) for Power, Coal and Renewable Energy, Mr. Piyush Goyal launched the UDAY DISCOM assurance Yojana to relieve power debts on various states in India. Initiated on the directions of the Centre, UDAY aimed at finding a permanent solution to the power debts. The ambitious debt settlement scheme started yielding positive outcomes, in just one and a half years. Keeping up with this success, 15 states, including Rajasthan have issued bonds worth Rs 2.32 lakh crores, covering nearly 86% of the total power debt. The data was recently quoted in a review submitted by the power ministry.
What is UDAY?
The UDAY DISCOM assurance scheme entitled the state governments to take over 75% of the total debt whereas the DISCOMS covered the remaining 25%. The states were expected to issue bonds to pay back lenders. The center, for the first time, took this initiative for the revival of debt-ridden power distribution units in India. The total debt liability of all the states amounts to Rs 3.95 lakh crores, as on September 2015.
Andhra Pradesh pioneered this initiative, followed by Rajasthan, Gujarat, Haryana, Punjab, Chhattisgarh, Jammu & Kashmir, Madhya Pradesh, Himachal Pradesh, Uttar Pradesh, Uttarakhand, and Telangana. Falling into their footsteps, other states joined shortly after. At present, West Bengal and Nagaland are the only states to opt out from UDAY DISCOM scheme. Total 26 states and 1 union territory fall under this scheme.
The states signed up for UDAY—a scheme covering nearly 97% of the total outstanding debts (3.82 lakh crores).
UDAY Success Stories: States Faired Well under DISCOMs
Regardless of being the largest state of India, Rajasthan made a commendable attempt at reducing its AT&C losses through feeders, electric meters, the famous Bithur Model and maintenance of poles and cables. The power losses came down from 27.3% to 23.6%. DISCOMS covered the difference between ACS and ARR, bringing it down from Rs 1.68 to Rs 0.5 (Rs/kWh), as noted in 2016-2017.
Other states, such as Haryana, Uttar Pradesh, and Tamil Nadu minimized their commercial and technical losses to great extend. Haryana DISCOM (Dakshin Haryana Bijli Vitran Nigam) may not have completely recovered from its losses, but it has registered a profit of Rs 78 crores in the first half of 2016-2017, thus setting a good example for the other states.
Uttar Pradesh and Tamil Nadu have sculpted their power losses to 30.21% and 14.53% respectively. TANGEDCO (Tamil Nadu DISCOM) looks forward to wiping out all its losses in next 15 years.
All this comes to one fact—DISCOMS have fared well under the supervision of the Centre and the state authorities. The states are expected to generate profits on power distribution soon.