J&K Becomes the 9th State to Join “UDAY” Scheme

J&K Becomes the 9th State to Join “UDAY” Scheme

                                              J&K Joins UDAY Scheme for financial restructuring of Discoms

Team EnergyInfraPost

In what will help the state of Jammu and Kashmir (J&K) derive an overall net benefit of Rs 9,800 crore through “UDAY” (or Ujwal DISCOM Assurance Yojana”) for operational and financial turnaround of the State’s Power Distribution Department, the Ministry of Power (representing the Government of India), and the State of J&K signed a Memorandum of Understanding (MOU) under the Scheme UDAY on March 15, 2016.

With this, J&K has become the 9th state after the recent signing of similar MoUs under UDAY by two other states—Punjab and Haryana.

Significantly, all these three have states signed MoU in the past one month, an indication of how states are speeding to join the scheme for making state DISCOMs financially viable. As many as 17 states have already agreed in principle to sign MoUs under the UDAY Scheme.

Till date, these 9 states, who have come on board for financial restructuring under the UDAY Scheme, have a combined DISCOM debt around Rs.1.94 lac crore, which is approximately 45% of the total outstanding DISCOM debt of Rs.4.3 lac crore as on 30th September, 2015.

“With Jammu and Kashmir signing UDAY MoU, we will be able to tackle 50% of total discom debt in the country. He congratulated J&K government and said that with time, more states are expected to join UDAY thereby, benefits reaching to more people across the nation,” said P K Pujari, Secretary, Ministry of Power.

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On his part, Dheeraj Gupta, Secretary (Power) State of Jammu and Kashmir said that the state of J&K was committed to improve operation efficiencies through UDAY.

“The main aim for signing this MoU is to restructure high interest rate of the total discom debt thereby improving financial condition of State Discom. The signing of MoU under UDAY would enable the State of Jammu & Kashmir to raise funds at cheaper rate to clear the outstanding dues of around Rs.3538 crore of CPSUs, which would entail an annual saving of Rs.1200 crore (over 4 years) towards interest cost to the State,” he added.

The MoU further paves way for improving operational efficiency of the Power Distribution Department of the State.

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 and transmission losses to 15% and 4% respectively is likely to bring additional revenue of around Rs.7150 crore during the period of turnaround.

While efforts will be made by the Power Distribution Department of the State to improve its operational efficiency, and thereby reduce the cost of supply of power, the Central government would also provide incentives to the DISCOMs 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/DISCOMs meet the operational milestones outlined in the scheme.

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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 785 crore 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 Jammu & Kashmir. The gain is expected to be around Rs.590 crore.

An overall net benefit of approximately Rs 9800 crore would accrue to the State by opting to participate in UDAY, by way of savings in interest cost, 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 Jammu & Kashmir. Reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers. Further, financially and operationally healthy State Power Distribution department 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.

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The scheme would allow speedy availability of power to around 108 villages and 3.56 lakh households in the State that are still without electricity. Availability of 24×7 power to hitherto unconnected villages/households etc. would boost the economy, promote tourism and industries, thereby improving employment opportunities for the people of the State.