Maharashtra joins UDAY scheme; to reduce interest burden by Rs 595 cr

It's the 7th state to join the scheme; 75% of discom's non-capex debt to be taken over during the current year

Maharashtra, one of the largest power consuming states with high industrial demand, joined the Ujwal Discoms Assurance Yojana (UDAY) to turnaround it's power distribution.

It's the seventeenth state to join UDAY, which was launched last year.

The state of Maharashtra in the memorandum of understanding (MoU) signed with the central government has committed to take over 75 per cent of discom’s non-capex debt of around Rs 6,600 crore during the current year. The balance 25 per cent of such debt remaining with the discom would be converted into bonds/repriced at cheaper rates. This would reduce the interest burden of the state and discom by Rs 595 crore.

 

Announced last year, UDAY envisages financial and operational turnaround of the stressed power distribution companies.

Through compulsory distribution transformer metering, consumer indexing and GIS mapping of losses, upgrade and change of transformers and meters, smart metering of high-end consumers, feeder audit etc, aggregate technical and commercial (AT&C) losses and transmission losses would be brought down, besides eliminating the gap between cost of supply of power and realisation. The reduction in AT&C losses of Maharashtra State Electricity Distribution Company Limited to 14.39 per cent and transmission losses of the State to 3.75 per cent is likely to bring additional revenue of around Rs 2,200 crore during the period of turnaround.

One of the first steps enlisted in the MoU is the takeover of 75 per cent of discom’s cumulative debt – 50 per cent by March 2016 and the balance by next year March. States would issue non-SLR state development loans against it at prevailing market rates. The balance 25 per cent would be issued as sovereign backed bonds by discoms.

Apart from financial improvements, the discoms would need to improve operational efficiency. Major targets being reduction of AT&C losses from current levels to 15 per cent by 2019. Also, improving collection and billing efficiency, considerably reducing energy theft, reducing gap between average cost of supply and average revenue realisation of discoms are also part of the targets.