Power Sector Distribution Reforms On Track : Piyush Goyal Informs The House

Power Sector Distribution Reforms On Track : Piyush Goyal Informs The House

As many as 18 States and one Union Territory viz. Puducherry have given their ‘in-principle’ approval to join the scheme Ujwal DISCOM Assurance Yojana (UDAY), a major reform handle of the Modi government to provide financial assistance to state distribution companies.

So far, 10 States have already signed the Memorandum of Understanding (MoUs) with Ministry of Power under UDAY, India’s Minister of State (IC) for Power, Coal & New and Renewable Energy, Piyush Goyal informed the Rajya Sabha on May 2.

The real benefits of signing these MOU by various states would accrue to the people of these states as reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers and will increase consumption. Higher demand for power from DISCOM 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.

Uttarakhand was the 10th state that signed an Memorandum of Understanding (MOU) under the Scheme UDAY – “Ujwal DISCOM Assurance Yojana” on 31st March, 2016 for operational turnaround of the DISCOMs.10 States have signed the MoU under Ujwal DISCOM Assurance Yojana (UDAY) Click To Tweet

The combined DISCOM debt that would be restructured in respect of these states is around Rs.1.96 lac crore, which is approximately 45% of the total outstanding DISCOM debt of Rs.4.3 lac crore as on 30th September, 2015.

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It may be noted here that the Government of India launched UDAY for the financial and operational turnaround of state-owned Power Distribution Companies (DISCOMs).

The scheme aims to reduce interest burden, reduce the cost of power, reduce power losses in Distribution sector, and improve operational efficiency of DISCOMs.

The scheme also incentivizes the States by exempting State takeover of DISCOM debts from FRBM limits for two years; increased supply of domestic coal; coal linkage rationalization; liberally allowing coal swaps from inefficient to efficient plants; allocation of coal linkages to States at notified prices and additional/priority funding in schemes of Ministry of Power and Ministry of New & Renewable Energy, if they meet the operational milestones in the scheme.