UP signs up for UDAY, eyes Rs 33,000 cr savings

Became the 1st non-BJP ruled state to sign an agreement to join UDAY scheme for revival of discoms

Uttar Pradesh on Saturday became the first non-BJP ruled state to sign an agreement to join Ujwal Discom Assurance Yojana (UDAY) scheme for revival of discoms, a move that is expected to result in savings of Rs 33,000 crore.

"Jharkhand, Chhattisgarh, Rajasthan (which have signed MoUs for UDAY are BJP states. Now, the largest state of the country -- Uttar Pradesh -- which is not a BJP state has signed MoU today. Bihar MoU is final. They have invited me to Patna for signing it," Power Minister Piyush Goyal said at the MoU-signing ceremony.

"Uttar Pradesh would save Rs 33,000 crore in the next three years through UDAY by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms and the like."

Under the agreement, Uttar Pradesh would take over Rs 39,900 crore of discom debt, which is 75 per cent of the total loan of Rs 53,200 crore outstanding as of September 30 last year.

The remaining 25 per cent debt of Rs 13,300 crore will be re-priced or issued as state guaranteed discoms' bonds at coupon rates of around 3 per cent less than the average existing interest rate.

The annual saving in the interest cost to the discoms would be around Rs 1,600 crore on account of the state taking over of debt and reduction in interest rates on the remainder.

With four states signing MoUs, the UDAY has covered over 35 per cent of the total debt of Rs 4.37 lakh crore of power distribution companies across the country, the minister said.

On the occasion, Uttar Pradesh Chief Minister Akhilesh Yadav, in a statement, said, "It is a historic day for the power sector of the state when the Centre and the state have come together to provide round-the-clock electricity supply."

Yadav promised that rural areas will get power supply for 16 hours a day and cities for 22-24 hours by October 2016.

The chief minister said the state government and the discoms have put in place all arrangements to increase availability of power in Uttar Pradesh to 17,500 mw, from the current 11,500 mw.

UP Principal Power Secretary Sanjay Agarwal said the state will start issuing bonds to offset debt of discoms in the first week of February.

Under the scheme, the reduction in AT&C and transmission losses to 15 per cent and 3.95 per cent, respectively, is likely to bring in an additional revenue of around Rs 17,700 crore by 2019.

The state's savings through efficient use of power is pegged at Rs 3,500 crore. Moreover, it would gain around Rs 5,600 crore due to coal reforms and operational efficiencies.

The scheme will facilitate quick availability of power for around 490 villages and 143.54 lakh households across Uttar Pradesh.

On behalf of the discoms of the state, Uttar Pradesh Power Corporation Ltd (UPPCL) signed the MoU.