Bihar 2nd non-NDA state to join UDAY scheme, to save Rs 9k cr

Bihar has become the second non-NDA state after Uttar Pradesh to formally join the UDAY scheme, meant for revival of debt-ridden power distribution utilities, which will help the state save Rs 9,000 crore.
The tripartite Memorandum of Understanding (MOU) among the Power Ministry, Bihar government and discoms of the state (North Bihar Power Distribution Company Ltd and South Bihar Power Distribution Company Ltd) was signed under the Ujwal discom Assurance Yojana (UDAY) here today.
Jharkhand, Chhattisgarh, Rajasthan, Uttar Pradesh and Gujarat have already inked such MoUs.
Union Power Minister Piyush Goyal who was present on the occasion said: "Elections had barely got over and within 15 or 20 days, I received the response from the Government of Bihar confirming their participation in the UDAY Yojana."

He added the Centre stands committed on all assurances in its Bihar package of over Rs 1.65 lakh crore that includes setting up of a 4,000-MW ultra mega power project at Banka.
Goyal informed that a mine has also been alloted for the project and the government has given coal linkage to Barh power project in Bihar and eventually the cheaper coal would reduce the cost of power at the plant by Rs 2 per unit.

The minister said in addition to the package, Bihar will save Rs 9,000 crore by way of interest cost savings, reduction in AT&C and transmission losses, interventions in energy efficiency and coal reforms, among others during the period of turnaround (next three years).

He also told that in the last 20 months of the NDA rule, 2,900 MW of power has been given from the Centre pool besides supply of 980 MW of electricity from Bhutan.
The minister also spoke about Buxar thermal power plant, which will supply 85 per cent of the electricity generated to the state.
Goyal assured that a large quantity of bonds to be issued by state governments and by discoms would be subscribed by provident funds and insurance companies.
The union government is expecting Rs 60,000 crore bonds to be issued by March.
Six more states including Andhra Pradesh, Uttarakhand, Punjab and Haryana are negotiating with the Centre to join UDAY scheme out of 17 states, which have agreed in principle to join the scheme.

The Bihar government would take over Rs 2,332 crore of
discom debt, being 75 per cent of the total amount of Rs 3,110 crore outstanding as on September 30, 2015.
The balance debt of Rs 778 crore to be re-priced or issued as state guaranteed discom bonds, at coupon rates around 3 per cent less than the average existing interest rate.
The annual saving in the interest cost to the state would be around Rs 117 crore on account of restructuring. The reduction in AT&C losses and transmission losses to 15 per cent and 4 per cent respectively is likely to bring additional revenue of around Rs 6,650 crore during the period of turnaround.

With the financial turnaround through financial and operational efficiencies, the rating of the discoms would improve, which would help them in raising cheaper funds for their future capital investment requirement. This is expected to provide interest cost saving of around Rs 80 crore to the discoms.
The state shall also be supported through additional coal at notified prices and in case of availability through higher capacity utilisation, low cost power from NTPC and other CPSUs.
Other benefits such as coal swapping, coal rationalisation, correction in coal grade slippage, availability of 100 per cent washed coal would help the state to further reduce the cost of power. The state would gain around Rs 1,086 crore due to these coal reforms.

Demand side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & air-conditioners and efficient industrial equipment through PAT (Perform, Achieve, Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in Bihar. The gain is expected to be around Rs 720 crore.
The scheme would allow speedy availability of power to around 1,152 villages and 160.60 lakh households in Bihar that are still without electricity.