Jammu and Kashmir joins UDAY discom debt plan

Jammu and Kashmir on Tuesday become the ninth state to join the central government's Ujwal Discoms Assurance Yojana (UDAY) scheme for restructuring state distribution companies' (discoms) accumulated debts, an official statement said.

Others that have joined UDAY till date are Rajasthan, Uttar Pradesh, Chhattisgarh, Jharkhand, Bihar, Gujarat, Haryana and Punjab.

Jammu and Kashmir will benefit by approximately Rs.9,800 crore by way of savings in interest cost, reduction in transmission losses, energy efficiency, coal reforms, among others, during the period of turnaround, said a union power ministry statement here.

"With Jammu and Kashmir signing the UDAY MoU, we will be able to tackle 50 percent of total discom debt in the country," said Power Secretary P.K. Pujari, who was present on the signing of the agreement.

Joining UDAY would enable the state of to raise funds at a cheaper rate to clear outstanding discom dues of around Rs.3,538 crore, which would entail an annual saving of Rs.1,200 crore over four years on interest costs.

Uday envisages taking over 75 percent of discoms' cumulative debt by March next year. States would issue loans against the debt at prevailing market rates. The balance 25 percent would be issued as sovereign backed bonds by discoms.