States will get more time to take over the outstanding debt of their electricity distribution utilities, issue bonds and thereby join the Ujwal DISCOM Assurance Yojana (UDAY), after the Cabinet extended the timeline for the entire process till March 31, 2017.
According to the UDAY scheme, approved by the Cabinet in September 2015, State governments had to take over 50 per cent of the debt of the electricity distribution utilities by March 31, 2016 and another 25 per cent by March 31, 2016. This debt would then be reissued as bonds.
After Wednesday’s decision, States can now take over the entire 75 per cent of the distribution utility debt by March 31, 2017.
“With the approval, States that could not join so far would get an opportunity to join UDAY,” an official statement said. So far, 19 States have given their consent to join the scheme out of which 10 — Rajasthan, Uttar Pradesh, Chhattisgarh, Jharkhand, Punjab, Bihar, Haryana, Gujarat, Uttarakhand and Jammu & Kashmir — have already signed memorandums of understanding. In 2015-16, bonds worth ₹99,541 crore were floated by States to clear 50 per cent of the outstanding debt of the distribution utilities.
While State governments take over 75 per cent of the electricity distribution utility debt, the remaining 25 per cent is reissued as Discom bonds backed by the State governments.
An official statement said ₹11,524 crore of Discom bonds were floated in 2015-16. In 2016-17 another ₹14,801 crore have been floated by the Uttar Pradesh government.
Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy, had said earlier that the timeline would be extended.
He had added that in 2016-17 fiscal a total of ₹1-1.5 lakh crore of bonds under the UDAY scheme are likely to be issued.
“UDAY provides for the financial turnaround and revival of electricity distribution utilities, and importantly also ensures a sustainable permanent solution to this long standing problem,” an official statement said.