Himachal Pradesh has become the 18th state to join UDAY, a central scheme for revival of debt stressed power distribution companies, availing a net benefit of about Rs 823 crore. “Government of India signed a Memorandum of Understanding with Himachal Pradesh and state DISCOM under the Ujwal DISCOM Assurance Yojana (UDAY) on Thusday, for operational and financial turnaround of the DISCOM. Himachal Pradesh is the 18th state to sign MoU under UDAY,” Power Ministry said in statement.
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An overall net benefit of about Rs 823 crore would accrue to the state by opting to participate in UDAY, by way of savings in interest cost, reduction in Aggregate Technical and Commercial (AT&C) and transmission losses, interventions in energy efficiency during the period of turnaround.
The state would take over Rs 2,891 crore of DISCOM debt, 75 per cent of the total DISCOM debt of Rs 3,854 crore as on September 30, 2015, as envisaged in the scheme.
It also provides for the balance debt of Rs 963 crore to be re-priced or issued as state guaranteed DISCOM bonds, at coupon rates of 3 per cent less than the average existing interest rate. The annual saving in the interest cost to the state would be around Rs 140 crore on account of restructuring of the DISCOM debt.
UDAY not only focusses on bringing about financial turnaround of the DISCOMs, but also lays stress on improving operational efficiencies of the DISCOMs.
In order to bring about a sustainable turnaround of the DISCOM, the state and the DISCOM will improve operational efficiency. The reduction in AT&C and transmission losses to 12.75 per cent and 3.50 per cent respectively is likely to bring additional revenue of around Rs 119 crore during the period of turnaround.
With the financial turnaround through financial and operational efficiencies, the rating of the DISCOM would 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 6 crore to the DISCOM.
Demand Side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & ACs and efficient industrial equipment through PAT (Perform, Achieve, Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in the state. The gain is expected to be around Rs 278 crore.