Uttar Pradesh on Saturday became the first non-BJP ruled state to sign an agreement to join the UDAY scheme for revival of discoms, a move that is expected to result in savings of Rs 33,000 crore.
“Jharkhand, Chhattisgarh, Rajasthan (which have signed MoUs for UDAY) are BJP states. Now, the largest state of the country, Uttar Pradesh, which is not a BJP state, has signed an MoU today. Bihar MoU is final. They have invited me to Patna for signing it,” power minister Piyush Goyal said at the MoU-signing ceremony.
Under the Ujwal DISCOM Assurance Yojana (UDAY), the UP government will take over Rs 39,900 crore of debt of the electricity distribution utilities. The balance Rs 13,300 crore of debt will be issued as state guaranteed DISCOM bonds at coupon rates that are 3% lower than the current interest cost. This would help save the distribution utilities Rs 1,600 crore annually. Efficiency measures including reduction of AT&C losses will help bring additional revenue of Rs 17,700 crore to the distribution utilities.
Welcoming the MoU signing, CM Akhilesh Yadav said today is historic as “the central and state governments have pledged their commitment towards one goal: providing the largest state 24×7 power”.
Besides helping the discoms to bring about financial turnaround, UDAY lays stress on improving their operational efficiencies. With this, the ratings of the discoms are also expected to improve, which would help them in raising cheaper funds for their future capital investment requirement. This is expected to provide interest cost saving of around Rs 200 crore to the discoms.
Uttar Pradesh expects to start issuing the bonds by the second week of February. “There is very good investor appetite for the bonds. We have had discussions with insurance companies, provident fund organisations and liquidity does not appear to be a problem,” Goyal added.