Rajasthan joins Uday discoms' debt restructure scheme

Rajasthan on Wednesday became the third state to join the union government's Ujwal Discom Assurance Yojana (Uday) scheme for restructuring the huge debts of state distribution companies (discoms).

A memorandum of understanding (MoU) was signed here between the central government, Rajasthan government and the three distribution utilities in the state - Jaipur Vidyut Vitran Nigam, Jodhpur Vidyut Vitran Nigam and Ajmer Vidyut Vitran Nigam.

"Rajasthan was the first state to come forward after I became power minister to appraise me of the dire situation in the state's electricity distribution utilities," said Power Minister Piyush Goyal, who was present on the occasion.

"The debt got accumulated due to gross mismanagement over five years of the Ashok Gehlot-led Congress government. The discoms were run to the ground," he added.

Under Uday, the Rajasthan government will take over Rs.60,500 crore of the debt on the books of the electricity distribution utilities. The remaining Rs.20,000 crore will be issued as state guaranteed "Discom" bonds at coupon rates of around 3 percent less than the current average interest rate.

As a result of adopting the scheme, Rajasthan discoms will save around Rs.3,000 crore per year through reduction in the annual interest cost.

By increasing the operational efficiency, the discoms are expected to generate an additional revenue of Rs.7,300 crore till fiscal 2018-19, a union power ministry statement here said.

Apart from the operational efficiencies and reduction in debt, Uday's demand side interventions such as use of energy-efficient LED bulbs and agricultural pumps will help reduce the energy consumption in the state that will help it save Rs.2,000 crore till fiscal 2018-19, the statement added.