UP, Bihar, Odisha, Maharashtra join discom debt restructure plan

Major states - Uttar Pradesh, Bihar, Odisha and Maharashtra - on Monday agreed to join the UDAY debt restructuring scheme for state distribution companies (discoms), taking the total of states joining to 15 and covering 90 percent of discoms' debts, Power Minister Piyush Goyal said here.

"This is a very important day in the history of power sector in India where on one day, 4th January, four very large and important states have agreed to come on board and joined the UDAY Scheme," he told reporters.

The other states that have joined within 2 months of the announcement of the union government's Ujwal Discom Assurance Yojana (UDAY) Scheme are Andhra Pradesh, Himachal Pradesh, Madhya Pradesh, Uttarakhand, Chhattisgarh, Jammu and Kashmir, Jharkhand, Gujarat, Punjab, Haryana and Rajasthan.

The power ministry said that Jharkhand would be the first state to sign an MOU on adopting the UDAY scheme at a ceremony here on Tuesday.

The scheme provides that states would take over 75 percent debt of discoms, as on September 30, 2015 in two years, and has inbuilt incentives encouraging state governments to voluntarily restructure their debts.

These incentives include taking over of discoms' debt by states outside the fiscal deficit limits, reduction in the cost of power through measures like coal linkage rationalization, liberal coal swaps, coal price rationalization, correction in coal grade slippage, allocation of coal linkages at notified prices and reduction in interest burden, a ministry release said.