Rajasthan joins UDAY scheme 3rd State to sign MoU

Centre, Rajasthan government and DISCOMs of Rajasthan today signed MoU under UDAY, a Scheme aimed at making efforts towards 100 percent village electrification.
Rajasthan joins UDAY scheme 3rd State to sign MoU

The Union Ministry of Power, Rajasthan government and three power distribution utilities of the state (Jaipur Vidyut Vitran Nigam Limited, Jodhpur Vidyut Vitran Nigam Limited and Ajmer Vidyut Vitran Nigam Limited) today signed Memorandum of Understanding (MoU) under the Scheme “Ujwal DISCOM Assurance Yojana (UDAY)” for operational and financial turnaround of the DISCOMs. The signing ceremony was held in the presence of Piyush Goyal Union Minister of State (IC) for Power, Coal and New & Renewable Energy in New Delhi.

Rajasthan is the third State to sign the MoU under UDAY, the other two States being Jharkhand and Chhattisgarh.

The Scheme UDAY was launched by the Government of India on November 20, 2015 to ensure a permanent and sustainable solution to the debt-ridden Distribution utilities to achieve financial stability and growth. The Distribution Utilities across the country have a long standing debt of almost Rs.4.3 Lakh crore. UDAY is an effort to make these DISCOMs financially and operationally healthy, to be able to supply adequate power at affordable rates, and enable the Governments to make efforts towards 100 percent village electrification and 24X7 Power For All.

By signing the MoU under UDAY, the DISCOMs of Rajasthan have taken the first step towards financial turnaround. The outstanding debt of the DISCOMs as on 30.09.2015 stands at Rs.80500 crore, out of which 75 percent, ie. Rs.60500 crore would be taken over by the State, as envisaged in the scheme. The scheme also provides for the balance debt of Rs.20000 crore to be re-priced or issued as State guaranteed DISCOM bonds, at coupon rates around 3 percent less than the average existing interest rate. The Rajasthan DISCOMs would have savings of about Rs.3000 crore in annual interest cost through reduction of debt and through reduced interest rates on the balance debt.

UDAY lays stress on improving operational efficiencies of the DISCOMs. The State of Rajasthan and the DISCOMs have committed to bring about operational efficiency through compulsory Feeder and Distribution Transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, thereby bringing about reduction in transmission losses and AT&C losses. The gap between cost of supply of power and realisation will also be eliminated by FY 18. The reduction in AT&C losses and transmission losses to 15 percent and 3.5 percent respectively is likely to bring additional revenue of around Rs.7300 crore to DISCOMs till FY 19.


The Central government would also provide incentives to the DISCOMs and the State Government for improving Power infrastructure in the State and for lowering the cost of power. The State of Rajasthan would get additional/priority funding through the Central schemes such as DDUGJY, IPDS, Power Sector Development Fund or such other schemes of MoP and MNRE, if they meet the operational milestones outlined in the scheme. The State would gain around Rs.3000 crore due to coal reforms.

Rajasthan would derive an overall net benefit of approximately Rs.21000 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 ultimate benefit of signing the MoU would go to the people of Rajasthan. The DISCOMs would also increase power supply in areas with reduced AT&C losses. The scheme would allow speedy availability of power to around 396 villages and 30 lakh households in Rajasthan that are still without electricity. Availability of 24×7 power to hitherto unconnected villages/households etc. would increase the economic activity and improve employment opportunities.  

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