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Uttar Pradesh, Maharashtra, Odisha and Bihar have agreed to join the central government’s electricity distribution utility (Discom) financial turnaround scheme to take the total number up to 15.
Piyush Goyal, Minister of State (Independent Charge) Power, Coal and New & Renewable Energy Minister said on Monday that within two months of getting Cabinet approval, more than half the states have voluntarily agreed to join the scheme called the Ujwal Discom Assurance Yojana (UDAY).
Under UDAY, states shall take over 75 per cent of Discom debt as on 30 September 2015 over two years where 50 per cent of Discom debt shall be taken over in 2015-16 and 25 per cent in 2016-17. Discoms will also issue bonds for the remaining 25 per cent of their debt which will be guaranteed by the state governments.
Further, states will issue non-SLR including SDL bonds in the market or directly to the respective banks and financial institutions holding the Discom debt to the appropriate extent.
“About 90 per cent of Discom losses are covered under the states that have joined the UDAY scheme,” said Goyal.
The states which have agreed to join the scheme are Andhra Pradesh, Rajasthan, Jharkhand, Madhya Pradesh, Uttarakhand, Himachal Pradesh, Punjab, Jammu & Kashmir, Haryana, Gujarat, Chhattisgarh, Uttar Pradesh, Bihar, Odisha and Maharashtra.
“There are 12 states and union territories in India which do not have separate Discoms. We do plan to include them also in UDAY in a different fashion. Effectively, most of the major states have joined and dialogue is ongoing with the other states,” Goyal added.
The Minister said that he hopes states will be able to issue bonds for 50 per cent of the Discom debt byMarch 31, 2016 and the remaining by March 2017.
“If there is a spill over, we do have some flexibility. Some states have very large exposures, Rajasthan for example. For states with this level of problem, we have an open mind, we can look at possibly stretching the timeline,” he added.
Commenting on why Tamil Nadu has not joined the scheme so far, Goyal said, “We are in active dialogue with them. But they have a peculiar problem. Their generation, transmission and distribution company is one. Therefore, the so called Discom debt also reflects the debt of power generation and power transmission. They have a large capacity of power generation so we cannot attribute that debt to the Discom. So it needs a lot more working and valuations to be done. We are in dialogue with the state and urged them to consider coming on board UDAY.”
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