It has been nearly eighteen months since the Ministry of Power announced the vital Ujwal DISCOM Assurance Yojana (UDAY) scheme for financial and operational reform of power distribution companies (DISCOMs) in India (refer, refer). Twenty six states and union territories, including four of the worst affected states – Rajasthan, Tamil Nadu, Uttar Pradesh and Haryana – have signed up for the scheme. The only notable omission is Odisha, which has not signed up because its DISCOMs are partly privately owned. The scheme has been undeniably successful in achieving its most important objective – of restoring financial health of DISCOMs – by transferring almost 75% of their debt to the state governments and reducing interest cost burden on the remaining 25% debt. The financial surgery to deal with soaring debt and losses of the DISCOMs will provide vigour to the entire power sector; As expected, progress on operational parameters such as aggregate technical and commercial (AT&C) losses and tariff hikes remains comparatively weak; Scheme monitoring and enforcement need to ensure that there is no relapse of the bad times; DISCOM financials were in a spectacular mess back in 2015 with aggregate debt of INR 4.3 trillion (USD 65 billion) and annual losses… Read More »
The post UDAY has been successful in achieving its most important objective appeared first on BRIDGE TO INDIA.