UDAY has 15 takers, Jharkhand first state to sign MoU

Tripartite agreement between state govts, discoms and Union Power Ministry

Mineral-rich but energy-deficit Jharkhand will become the first state to sign a memorandum of understanding (MoU) with the Centre, on Tuesday, for the Ujwal Discom Assurance Yojana (UDAY) reforms for state-owned power distribution companies (discoms).

The MoU is a tripartite agreement is between the state government, the power distribution companies and the Union ministry of power.

With this, the total number of states that would be joining UDAY will become 15. The other states that are on board UDAY are Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Gujarat, Haryana, Chhattisgarh and Madhya Pradesh.

Besides, four major states — Uttar Pradesh, Bihar, Maharashtra and Odisha — have already given their in-principle approval to join UDAY.

“Close to 90 per cent of the discom losses is under reform plan with these four major states joining UDAY,” said Piyush Goyal, minister of state for coal, power and renewable energy.

The Centre is hopeful that 21 states would join UDAY by March 2016. 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.

According to power ministry officials, the parameters of the agreement have been finalised with strict monitoring clause. The MoU lists out a slew of baits for the discoms if they meet the required operational efficiency.

The parameters are divided into three parts: financial, operational and monthly monitoring. There are close to 15 guidelines each for financial and operational efficiency, which the states need to adhere to, to meet the stipulated targets. The parameters and the performance of the discoms would be made public.

The monitoring of the states would be done by joint committees with representation from the ministry of power and all its subsidiaries, ministry of finance, state government and its energy department, and representation from public sector banks and financial institutions.

PLUGGING INTO POWER NEEDS

• The other states that are on board UDAY are Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Gujarat, Haryana, Chhattisgarh and Madhya Pradesh
   
• The Centre is hopeful that 21 states would join UDAY by March 2016
   
• For the states that sign up for UDAY, one of the first steps is to take over 75% of discom debt as on September 30, 2015 over two years — 50% in 2015-16 and 25% in 2016-17