Haryana to join UDAY scheme for debt-laden discoms

Rs 8,000 cr gain to power discoms in interest costs

Haryana will soon join the Union government’s Ujwal Discom Assurance Yojana (UDAY) scheme for restructuring debt of power distribution companies (discoms) in the state. A senior state government official said the power discoms in the state had a total debt of Rs 34,500 crore, of which the state government would take over Rs 25,000 crore in two tranches.

Haryana has the highest aggregate technical and commercial losses in India at 30-33 per cent, followed by Rajasthan. Piyush Goyal, Union minister of state for power & coal, said Haryana would be signing a legally-binding agreement for UDAY this month.

“In the first tranche, the state will take over Rs 17,000 crore debt in 2016-17. Another Rs 8,000 crore will be taken over before September 2018,” said the state government official cited above.

The actual transfer by way of grant would happen over five years. The grant component would be 20 per cent, while the remaining would be debt. Non-statutory liquidity ratio bonds would be issued against the 80 per cent debt for which the distribution companies would have to pay an interest of 8.5-nine per cent against 12.5-13 per cent, which is normally paid. “The state discoms stand to gain Rs 8,000 crore from the scheme,” said the official.

Seven states have formally signed up for UDAY scheme. Punjab joined the scheme last week. The UDAY scheme announced last year envisages financial and operational turnaround of stressed power discoms. So far, 16 states have given their in-principle approval to join UDAY. Besides the conditions that the UDAY scheme mandatorily imposes on the discoms, the Haryana government would also ask the discoms to prepare an action plan to increase billing and increase collection efficiency. Simultaneously, the state government would clear the subsidy dues to the discom. Twenty-six per cent of power in Haryana is supplied for agriculture purpose to rural areas. The dues of Rs 400-500 crore arose due to re-calculation by the state power regulator. For 2015-16, the state has provisioned Rs 6,700-crore subsidy, said the official.

Under UDAY, loss has to be brought down to 15 per cent from current levels by 2019. “The trajectory for loss reduction will be very steep for us,” said the official.