Saddled with the highest amount of power discoms’ losses, to the tune of Rs 80,000 crore, Rajasthan signed a tripartite agreement with the central government and its three discoms for implementing the reforms under Ujwal Discom Assurance Yojana (UDAY).
As envisaged in the UDAY scheme, the state government would take over the debt of its discoms in a phased manner — 75 per cent in the first fiscal year and balance the next year. The MoU also entails reduction in technical and commercial losses and improving operational efficiencies.
In the first year, the Rajasthan state government would take over 75 per cent of the outstanding debt, that is Rs.60,500 crore. The scheme also provides for the balance debt of Rs 20,000 crore to be re-priced or issued as ‘state guaranteed discoms bonds’, at coupon rates of around 3 per cent or less than the average existing interest rate, said power ministry officials.
“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,” said Sanjay Malhotra, principal secretary (energy), government of Rajasthan.
The state government would take over debt either as equity or grant. The MoU offers option to take over debt either as loan, equity or debt, depending on the financial status of the state government.
Additionally, he said reduction in aggregate technical and commercial losses and transmission losses to 15 per cent and 3.5 per cent respectively would bring additional revenue of around Rs 7,300 crore to discoms till FY 19.
The state government would also invite private distribution franchises to improve efficiency, he said. It has already set up ‘Rajasthan Energy Development Corporation Limited’ for purchase and sale of power in the state, currently being done by the discoms.
The three discoms of Rajasthan are Jaipur Vidyut Vitaran Nigam, Ajmer Vidyut Vitaran Nigam and Jodhpur Vidyut Vitaran Nigam. Rajasthan is the third state to sign the MoU post Jharkhand and Chhattisgarh. The number of states that have given in-principle approval for joining the UDAY reforms is now 15.
For the states that sign up for UDAY, one of the first steps is to take over 75 per cent of discom debt as on September 30, 2015, over two years — 50 per cent in 2015-16 and 25 per cent in 2016-17.
Power ministry officials said the parameters of the agreement have been finalised with a strict monitoring clause. The MoU lists out a slew of centrally sponsored funding for the discoms if they meet the required operational efficiency. The parameters are divided into three parts: financial, operational and monthly monitoring.
There are close to 15 guidelines each for financial and operational efficiency which the states need to adhere to for meeting the stipulated targets. The parameters and the performance of the discoms would be made public.
The monitoring of the states would be done by a joint committee, with representation from ministry of power and all its subsidiaries, ministry of finance, state government and its energy department, along with representation from public sector banks and financial institutions.