1. Under Ujjwal Discom Assurance Yojana, losses of state discoms fall 22 pct to Rs 40,295 cr

Under Ujjwal Discom Assurance Yojana, losses of state discoms fall 22 pct to Rs 40,295 cr

Financial losses of power distribution companies (discoms) of states which have joined the Ujwal Discom Assurance Yojana (Uday) have fallen by 21.5% in the year to Rs 40,295 crore in FY17.

By: | New Delhi | Published: July 25, 2017 7:32 AM
Ujjwal Discom Assurance Yojana, Ujjwal Yojna, Ujjwal scheme, state discoms, Discoms of Rajasthan, average cost of supply, power ministry Gap between discoms’ average cost of supply and average revenue realised narrowed by Rs 0.07/unit in FY17 to Rs 0.47/unit.

Financial losses of power distribution companies (discoms) of states which have joined the Ujwal Discom Assurance Yojana (Uday) have fallen by 21.5% in the year to Rs 40,295 crore in FY17. Discoms of Rajasthan, which saved about Rs 4,700 crore through lower interest costs, saw losses falling by 54% to Rs 5,208 crore. Decrease in losses corresponds with significant savings made by the discoms through lower interest costs, as per the design of the Uday scheme. Governments of 16 states have taken over around Rs 2.3 lakh crore debt of their discoms as per the terms of Uday. This helped in lowering interest rates to 7-8.5% from around 11-12%, resulting in discoms saving Rs 11,989 crore till December 2016.

Some discoms of other big states, traditionally burdened with huge losses, also saw significant improvements in their financial performances. Uttar Pradesh, Madhya Pradesh, Tamil Nadu and Maharashtra witnessed drop in losses by 14%, 16%, 35% and 8% to Rs 6,619 crore, Rs 4,813 crore, Rs 3,783 crore and Rs 2,568 crore, respectively. However, financial losses of discoms of Punjab, Jharkhand and Bihar have increased by 20%, 72% and 53% to Rs 2,386 crore, Rs 2,001 crore and Rs 1,641 crore, respectively.

The performances of several state discoms have seen an improvement since they signed up for Uday. The gap between the discoms’ average cost of supply and average revenue realised narrowed by Rs 0.07/unit in FY17 to Rs 0.47/unit. The average aggregate technical and commercial losses for all Uday states has come down by about four percentage points to 20.2% as well.

The government hopes that the situation will improve further by the end of the ongoing financial year with operational developments. Ajay Kumar Bhalla, secretary, power ministry, told FE that with more projects being awarded, there should a palpable difference in the metering front — a vital area which helps to reduce technical losses and minimise outages.

While more than 25 lakh distribution transformers (both urban and rural) had been metered till June, 2017, the number is not even 45% of the target which needs to be met by December, 2017. Uday also envisaged the installation of smart meters for consumers using 200-500 units of electricity every month by December, 2019. Only 1% of the overall target of 1.7 crore smart meters has been met so far.

Research firm Icra recently said Uday has improved the liquidity profile of the discoms to some extent and expects Discoms book losses on a national level to decline from Rs 60,000 crore in FY16 to Rs 35,000 crore in FY18. However, the firm also estimated that the overall subsidy dependence of the state-owned power discoms for FY18 would increase annually by about 7-8% to around Rs 81,000 crore.

Under Uday, state governments are required to take over 75% of the short-term liabilities of their respective discoms (as in September-end 2015), 50% in the first year (FY16) and the balance in FY17. The accumulated losses of discoms stood at a staggering Rs 3.8 lakh crore at the launch of Uday. Their outstanding debt then stood at Rs 4.3 lakh crore.

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