India's first smart grid to come up in Gurgaon

Maharashtra to expand UDAY scope, says Goyal; expect interest rates to come down

The Union government has set in motion the process of rewarding performing states under Uday, the flagship programme in power sector. It would extend support to the country’s first smart grid project to be set up at Gurgaon in Haryana, which has been a performing state under the debt restructuring programme for state-owned power distribution companies. 

Besides, the NDA government also expects interest rates to come down in near future which will help the states in further saving loan costs, Union power minister Piyush Goyal said here today.

WHAT IS A SMART GRID?

A smart grid is an electrical grid, which includes a variety of operational and energy measures, including smart meters, smart appliances, renewable energy resources and energy-efficiency resources

Goyal also said the Maharashtra government would modify its earlier Cabinet decision of joining Uday for only performance parameters. “The state was earlier joining for only operational improvement. But now it will join for financial turnaround as well, which would lead to benefit of Rs 1,500 crore,” said Goyal.

For the first phase of smart grid project, the Union government would extend a grant of Rs 273 crore to the state. The assistance to Haryana would be given from the Power System Development Fund (PSDF) for Rs 7,000-crore project, the first phase of which would cost Rs 1,382 crore.

The project would be spearheaded by Power Grid Corporation along with the state government, industry and real estate developers. Haryana chief minister Manohar Lal had a meeting with Goyal earlier in the day for a review of power sector in the state.

The smart grid project would ensure 24X7 quality power supply to the city which depends on diesel gensets due to irregular power cuts. While the state government would match the Centre’s grant for the project, 60% cost would be met through loans. Goyal said Haryana was among the better performing states under UDAY and they would be provided special incentives as central funding for various projects.

UDAY or Ujwal Discoms Assurance Yojana is the revival plan for state owned power distribution companies. The state owned discoms cumulatively own a debt of Rs 4 lakh crore. Till yet, 19 states have given their consent to join the scheme, out of which 10 States, viz. Rajasthan, Uttar Pradesh, Chattisgarh, Jharkhand, Punjab, Bihar, Haryana, Gujarat, Uttarakhand and Jammu & Kashmir have already signed MOUs with the Central Government.

One of the first steps enlisted in the MoU for Uday is the takeover of 75% of discom’s cumulative debt ?50% in the first year and balance the next year. States would issue non-SLR SDLs (State development loans) against it at prevailing market rates. The balance 25% would be issued as sovereign backed bonds by discoms.

In the year 2015-16, bonds worth Rs 99,541 crore were floated by the participating states to clear half of the outstanding debt of states and outstanding CPSU dues in Jharkhand and Jammu & Kashmir. The Union Cabinet recently approved the extension of the deadline for applying for the UDAY scheme which works on a reward system attached to certain parameters.

Goyal is also banking on lowering of interest rate for the renewable energy sector. “The two key state owned lenders – PFC and REC are preparing a special financial product for the renewable energy sector. We will wait for the interest rate to fall further which would be the benchmark for the equity fund that we are preparing for the sector,” he said.

DOING A POWER OF GOOD

• Centre expecting interest rates to fall further, to benefit states and renewable energy sector
• Renewable energy equity fund to come after interest rates fall further
• Maharashtra to change earlier stance, to join Ujwal Discom Assurance Yojana (UDAY) for both financial and operational turnaround
• Haryana and Rajasthan emerge as top performers in UDAY, informs Piyush Goyal