UDAY will lead to annual savings of Rs 1.8 lakh cr

PFC, REC will be able to give fresh loans of $50-60 bn in the next five years

The Centre’s ambitious Ujwal Discom Assurance Yojana (UDAY) will lead to annual savings of $30 billion (Rs 1.8 lakh crore) by 2018-19. The proposed saving is on account of energy efficiency to be achieved by reduction in interest rate; takeover of discoms’ debt by states; reduction in aggregate technical and commercial (AT&C) losses by discoms; increase in coal availability; coal swapping; and demand-side management.

“It will be savings worth Rs 1.8 lakh crore, which means saving of Rs 1.2 per unit when compared to business as usual. Banks do not have to take any haircut under UDAY,” minister for power, coal and renewable energy Piyush Goyal told reporters after his interaction with stake holders.

The minister said practically all states have come on board. He said Bihar, where Bharatiya Janata Party-led National Democratic Alliance has just been defeated in the Assembly polls, will also go in for UDAY. “Elections will come and go. Of course, I do not see any difficulty that Bihar will be on board. I am quite confident that they will see merit in this,'' he opined. Goyal allayed fears that state-run Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will be impacted adversely due to the implementation of UDAY as both have lent substantially to discoms. “Instead, PFC and REC will be able to unlock and lend $50-60 billion of fresh loan in transmission and renewable energy in the next five years,” he noted.

The minister said PFC and REC are not deposit-taking institutions and clarified that the government will not stress their balance sheets with eight-nine per cent bond.