1. UP, Bihar get a year extra to cut losses

UP, Bihar get a year extra to cut losses

While the UDAY timelines for cutting losses of electricity boards have mostly been adhered to, some leeway has been given for states like UP and Bihar, whose discoms have the highest level of losses, reports Sumit Jha in New Delhi.

By: | New Delhi | Published: March 18, 2016 1:21 AM
power tariff While the UDAY timelines for cutting losses of electricity boards have mostly been adhered to, some leeway has been given for states like UP and Bihar, whose discoms have the highest level of losses, reports Sumit Jha in New Delhi. (Reuters)

While the UDAY timelines for cutting losses of electricity boards have mostly been adhered to, some leeway has been given for states like UP and Bihar, whose discoms have the highest level of losses, reports Sumit Jha in New Delhi. Discoms in these two states need to reduce their aggregate technical and commercial (AT&C) losses to 15% by FY20 while others will have to do so by FY19, as originally planned. AT&C losses of UP and Bihar discoms have been hovering around 40% for a few years now. UP, Bihar, Haryana and J&K will also get an additional year — till FY20—to eliminate the gap between cost of supply of electricity and revenue. The cost-revenue gap of the discoms in the four states is R1.5-2/unit or around 30%.

While UDAY mandates states have to assume 75% of their discoms’ STLs — close to R 4.5 lakh crore — in two years, some of the states which signed the MoUs opted to treat part of the debt being taken over as loans to discoms, to alleviate their fiscal stress from the exercise.

The savings to the discoms from states’ takeover of their debt would have been higher had the entire debt been assumed by states as grant/equity. The power ministry had earlier said even if states take over part of the debt as loan, they will have to convert the same into grants after two years.

Meanwhile, only UP and Rajasthan have so far issued bonds to the discoms’ lenders under UDAY. The lenders have agreed to give moratorium in payment of principal amounts to these states: Three years for UP and five years for Rajasthan.

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    Parag Rajadhyaksha
    Mar 18, 2016 at 5:05 am
    Why are discoms in UP & Bihar running heaviest losses since years? It's clear that these are worst run states. How long can other more efficient states subsidize these laggards where corruption and caste based politics is rife.
    Reply

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