The benefits of the Ujwal Discom Assurance Yojana (Uday) scheme are yet to be felt by the power sector, experts have said. Talking at an event conducted by KPMG here on Tuesday, Prabir Neogi, chief executive (corporate affairs), CESC, said inefficient power purchase models implemented by the state-owned power distribution companies (discoms) have added to their financial woes. The Uday scheme, which comprised debt restructuring of the discoms to lower interest rates, was designed to financially turn around the distribution utilities. The scheme has also set operational targets such as reduction in aggregate technical and commercial (AT&C) losses and annual power tariff revision to improve the finances of the discoms.
Industry veterans who spoke at the event reiterated that discom finances, along with the tepid rise in power demand, were the main reasons behind the woes of the sector, including 60,000 MW of stranded electricity generation assets. Talking at the event, Azure Power chairman Inderpreet Wadhwa said payment discipline is still lacking on part of the discoms, leading to working capital issues for solar power companies like Azure. Schemes like Uday prove that the “government has the intent to solve it,” Wadhwa added.
A report released by KPMG at the event said pockets of successes have started to appear with some states responding to the targets set by Uday, but there is still a long way to go. Talking about financing in the energy sector, PTC India Financial Services CEO Ashok Haldia said “stressed assets have become a part of the lenders’ life”. However, the funding scene would improve if the recent uncertainties about power purchase agreements can be tackled. Addressing a query on the viability of low renewable energy tariffs discovered in the latest auctions, Haldia said no lender was sure about the sustainability of such projects.