Bihar becomes 2nd non-BJP state to join UDAY power reforms

Centre claims state would earn benefits of Rs 9,000 crore

Becoming the sixth state and the second non-BJP state after UP to join the Ujwal Discom Assurance Yojana (UDAY), Bihar signed the tripartite agreement or MoU with the Union ministry of power and its respective power distribution company (discom).

The total discom’s debt is Rs 3,110 crore and as envisaged in the UDAY scheme, the state government would take over 75 per cent of it. The balance debt would be re-priced or issued as ‘state guaranteed discom bonds’, at coupon rates around 3 per cent or less than the average existing interest rate.

The annual saving in the interest cost to the state would be around Rs 117 crore on account of restructuring of the discoms debt,” said Piyush Goyal, minister of state for coal, power and renewable energy, “The reduction in AT&C losses and transmission losses to 15 per cent and 4 per cent respectively is likely to bring additional revenue of around Rs 6650 crore during the period of turnaround.”

Power ministry officials said an overall net benefit of approximately Rs 9000 crore would accrue to the state by participating in UDAY, by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc.

Goyal also said any surplus demand from the state would be met the central government and PSUs. Till yet six states – Jharkhand, Chhattisgarh, Gujarat, Uttar Pradesh and Rajasthan have signed MoU for UDAY and 16 states have given in-principle approval for participating in the reforms scheme.

For the states that sign up for UDAY, one of the first steps is to take over 75 per cent of discom debt as on September 30, 2015 over two years - 50 per cent in 2015-16 and 25 per cent in 2016-17.

The parameters of the agreement have been finalised with strict monitoring clause and are divided into three parts: financial, operational and monthly monitoring. The MoU also lists out a slew of central financial assistance for the discoms if they meet the required operational efficiency.

UDAY is centrally initiated power reform plan to make the discoms financially independent and operationally healthy and ensure 100 per cent village electrification and ‘24X7 Power For All’.