Rajasthan third state to join UDAY, to 'save Rs 21,000 cr in 3 yrs'

Outstanding debt of the Discoms of Rajasthan stands at Rs 80,500 crore as on September 30, 2015

Rajasthan has become the third state after Jharkhand and Chhattisgarh to formally join Centre's UDAY scheme meant for revival of discoms and it will help the state "save Rs 21,000 crore in the next 3 years".

"UDAY (Ujwal DISCOM Assurance Yojana) will help Rajasthan save Rs 21,000 crore over the next three years. The savings will ultimately help power consumers through lower tariffs," Power Minister Piyush Goyal said today after Rajasthan and its discoms inked MoU with central government to join the scheme.

The MoU was signed by Rajasthan and its Discoms Jaipur Vidyut Vitran Nigam Ltd, Jodhpur Vidyut Vitran Nigam Ltd and Ajmer Vidyut Vitran Nigam Ltd) today under the UDAY scheme for operational and financial turnaround of these firms.

On this occasion, the minister said there are three more such MoUs (with states) ready and final to be signed.

"The Ashok Gehlot-led Congress government is responsible for Rs 80,000 crore accumulated debt of Rajasthan which is the largest among all states. This debt was Rs 17,000 crore when the BJP left the state in 2008," Goyal told reporters.

He also said Vasundhara Raje was the first Chief Minister who brought the issue to his notice and asked for a resolution.

Rajasthan's Principal Secretary Energy Sanjay Malhotra said, "The scheme will reduce financial costs (of borrowing). There would be benefit of around Rs 2,000-2,500 crore depending on the rate of interest on which we will get the loan."

Elaborating he said, "At present the rate of interest on our loans of Rs 60,000 crore was about 12%. If we get that on 8 or 8.5% then there will be saving of about 3.5% or Rs 2,500 crore every year under this scheme."

He further said, "In the next five years, there would not be any loan of Rs 60,000 crore on the books. Either it would be a grant or equity in the period of next five years. We have already floated the tender for remaining Rs 20,000 crore (debt) identifying the transaction advisor. Once the company is on board, we will issue the bonds.

The outstanding debt of the Discoms of Rajasthan as on September 30, 2015 stands at Rs 80,500 crore, out of which 75%, i.e. Rs 60,500 crore would be taken over by the state, as envisaged in the scheme.

The scheme also provides for the balance debt of Rs 20,000 crore to be re-priced or issued as state guaranteed Discom bonds, at coupon rates around 3% less than the average existing interest rate.

The Rajasthan Discoms would have savings of about Rs 3,000 crore in annual interest cost through reduction of debt and through reduced interest rates on the balance debt.

Under the scheme, the gap between cost of supply of power and realisation will also be eliminated by FY18. The reduction in AT&C losses and transmission losses to 15% and 3.5% respectively is likely to bring additional revenue of around Rs 7,300 crore to state Discoms till FY19.

Rajasthan would derive an overall net benefit of approximately Rs 21,000 crore through UDAY, by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc.

The scheme would allow speedy availability of power to around 396 villages and 30 lakh households in Rajasthan that are still without electricity.