Telangana and Assam signed memoranda of understanding (MoUs) to join the Ujwal Discom Assurance Yojna (UDAY) on Tuesday, taking the total number of states covered under the scheme to 20.

Power Minister Piyush Goyal said at an event here: “An overall net benefit of approximately ₹6,116 crore to Telangana and ₹1,663 crore to Assam will come from joining the scheme. With these two States coming on board, States with over 90 per cent of total discom debts to be covered under UDAY after Tamil Nadu comes on board.”

The scheme aims to better the performance of state-run power distribution companies.

Discom liabilities According to an official statement, the Telangana government will take over ₹8,923 crore of the total ₹11,897 crore of discom debt. The Assam government will take over ₹928 crore out of total ₹1,510 crore discom debt (being 75 per cent of their respective discom debt outstanding as on September 30, 2015, as envisaged in the scheme) and the balance debt would be re-priced or issued as state-guaranteed discom bonds.

This will bring annual savings in interest payments to the tune of ₹387 crore to Telangana and ₹37 crore to Assam. The interest cost on future borrowings is also expected to reduce, providing a saving of around ₹30-40 crore to these States.

In the case of Telangana, the reduction in Aggregate Technical and Commercial losses (AT&C) losses and transmission losses to 9.95 per cent and 3 per cent respectively, is likely to bring additional revenue of around ₹1,476 crore, during the period of turnaround, whereas the additional revenue of ₹699 crore would accrue to Assam on reduction of AT&C losses and transmission losses to 15 per cent and 3.4 per cent, respectively.

Other gains The gains to these states through demand side interventions is expected to be around ₹1,200 crore for Telangana and ₹260 crore for Assam. Telangana and Assam are also expected to benefit around ₹2,250 crore and ₹520 crore respectively, on account of the support being extended by the Centre through various coal reform measures.

The government also launched the UDAY portal and mobile app to enable transparency in working of discoms. The portal will track and monitor the progress of discoms on operational and financial parameters under the UDAY scheme.