Rajasthan has become the third state to sign a memorandum of understanding for joining the central government’s state electricity distribution utility revival scheme.

The MoU was signed between the central government, Rajasthan government and the three electricity distribution utilities in Rajasthan – Jaipur Vidyut Vitran Nigam Ltd, Jodhpur Vidyut Vitran Nigam Ltd and Ajmer Vidyut Vitran Nigam Ltd.

Under the Ujwal DISCOM Assurance Yojana (UDAY) scheme, the Rajasthan government will take over ₹ 60,500 crore of the debt on the books of the electricity distribution utilities. The remaining ₹ 20,000 crore will be issued as state guaranteed DISCOM bonds at coupon rates of around 3 per cent lower than the average existing interest rate.

As a result, the distribution utilities of Rajasthan will save around ₹ 3,000 crore annually through reduction in annual interest cost. By increasing the operational efficiency and ensuring AT&C losses, an additional revenue of ₹ 7,300 crore is expected to come to the DISCOMs till fiscal 2018-19, an official statement said.

“Rajasthan was the first state to come forward after I became Power Minister to appraise me of the dire situation in the state’s electricity distribution utilities. We had realised this will be one of the biggest challenges of the power sector. UDAY will help Rajasthan save ₹ 21,000 crore over the next three years and the savings will ultimately help consumers through lower tariffs,” said Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy.

Apart from operational efficiencies and reduction in debt, UDAY’s demand side interventions which include usage of energy-efficient LED bulbs, agricultural pumps and other such initiatives will help reduce the energy consumption in the state. The Ministry of Power estimates that this will help Rajasthan save ₹ 2,000 crore till fiscal 2018-19.