Bihar to join UDAY scheme tomorrow

Tripartite MoU to join the scheme will be signed by Power Secretary of Bihar, representatives of discoms and the ministry in New Delhi

Bihar will become the sixth state tomorrow to formally join the UDAY scheme meant for revival of debt-ridden power distribution utilities.

According to a statement by the Power Ministry, the tripartite Memorandum of Understanding (MoU) for joining the scheme will be signed by Power Secretary of Bihar, representatives of discoms and the ministry here in the capital.

Jharkhand, Chhattisgarh, Rajasthan, Uttar Pradesh and Gujarat have already inked the memorandum of understandings (MoUs) for joining the scheme.

Discoms across the country have an accumulated debt of over Rs 4.37 lakh crore.

The Ujwal Discom Assurance Yojana (UDAY) has been launched to improve financial and operational efficiencies of power distribution companies (discoms).

It envisages to reduce interest burden, cost of power and transmission losses. Consequently, discoms will become sustainable to supply adequate and reliable power enabling 24x7 power supply.

The scheme provides that states would take over 75 per cent of the debt of discoms, as on September 30, 2015, in two years.

UDAY has inbuilt incentives encouraging state governments to voluntarily restructure their debts.

These incentives include taking over of discom debt by the states outside the fiscal deficit limits, reduction in the cost of power through various measures such as coal linkage rationalisation, liberal coal swaps and priority/additional funding through various central government schemes, among others.

UDAY is different from earlier restructuring schemes in several ways, including flexibility of keeping debt taken over outside fiscal deficit limit, reduction in cost of power and a series of time bound interventions for improving operational efficiency.