Maharashtra has become the 17th State to join the UDAY – “Ujwal DISCOM Assurance Yojana”, the Centre’s financial and operational turnaround scheme for state power distribution companies (DISCOMs). The move will see the state reap benefits of Rs 9,725 crores by way of cheaper funds, reduction in AT&C losses and enable it to eliminate the gap between cost of supply of power and realisation.
A Memorandum of Understanding (MOU) under UDAY was signed on October 7th between the power ministry (Government of India), the State of Maharashtra and the DISCOM of Maharashtra (MSEDCL).
With this, 17 states/UT have signed the MoU under UDAY. As a result, the combined DISCOM debt (including CPSU dues) that would be restructured in respect of these states is around Rs.2.57 lac crore, which is around 68% of the total outstanding DISCOM debt as on 30th September, 2015.
“Today the Government of Maharashtra has taken a positive step towards supporting its DISCOM by signing the MOU under UDAY for further improving the financial and operational efficiency of the already efficient DISCOMs,” said power minister Piyush Goyal at the signing ceremony of the MoU on the sidelines of the ongoing state power minister’s conference at Vadodara in Gujarat.
Congratulations to Maharashtra on signing UDAY MoU and taking the next step towards realizing affordable power for all. pic.twitter.com/WXPlT2AG7X
— Piyush Goyal (@PiyushGoyal) October 7, 2016
Under the MoU, the State of Maharashtra has committed to take over 75% of DISCOM’s non-capex debt of around Rs.6600 cr. during the current year. Balance 25% of such debt remaining with the DISCOM would be converted into Bonds/repriced at cheaper rates. This would reduce the interest burden of the State/DISCOM by Rs.595 cr.
Through compulsory Distribution Transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, feeder audit etc. AT&C losses and transmission losses would be brought down, besides eliminating the gap between cost of supply of power and realisation.
The reduction in AT&C losses of MSEDCL to 14.39 % and transmission losses of the State to 3.75% is likely to bring additional revenue of around Rs.2200 cr. during the period of turnaround.
While efforts will be made by the State Government and the DISCOM to improve the operational efficiency of the DISCOM, and thereby reduce the cost of supply of power, the Central government would also provide incentives to the DISCOM and the State Government for improving Power infrastructure in the State and for further lowering the cost of power. The Central schemes such as DDUGJY, IPDS, Power Sector Development Fund or such other schemes of MOP and MNRE are already providing funds for improving Power Infrastructure in the State and additional/priority funding would be considered under these schemes, if the State/DISCOM meet the operational milestones outlined in the scheme. The State shall also be supported through additional coal at notified prices and in case of availability, through higher capacity utilization, low cost power from NTPC and other CPSUs. Other benefits such as coal swapping, coal rationalization, correction in coal grade slippage, availability of 100% washed coal would help the state to further reduce the cost of Power. The State would gain around Rs.4500 cr. due to these coal reforms.
Demand Side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & air-conditioners and efficient industrial equipment through PAT (Perform, Achieve, Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in the State of Maharashtra. The gain is expected to be around Rs.2370 cr. Improvement in operation efficiency would enable the DISCOM to borrow at cheaper rates in future, for their infrastructure development and mprovement of existing infrastructure. The gain is expected to be around Rs.60 cr.
An overall net benefit of approximately Rs.9725 cr. would accrue to the State by opting to participate in UDAY, by way of cheaper funds, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc. during the period of turnaround.
The ultimate benefit of signing the MOU would go to the people of Maharashtra. Reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers. Further, financially and operationally healthy DISCOM would be in a position to supply more power. Higher demand for power would mean higher PLF of Generating units and therefore, lesser cost per unit of electricity which would again mean lesser cost per unit of electricity to the consumers.