The Government of India has signed four Memorandum of Understanding (MoU) under the UDAY Scheme with the State of Nagaland and with Union Territories (UTs) of Andaman & Nicobar Islands, Dadra & Nagar Haveli & Daman & Diu for operational improvements. These State/UTs have joined only for operational improvement and shall not undergo financial restructuring/issue of bonds under the scheme. With the above, UDAY club has now grown to 27 states and 4 UTs.
An overall net benefit of approximately Rs. 551 crores, Rs. 18 crores, Rs. 13 crores and Rs. 10 crores respectively would accrue to the State of Nagaland & UTs of Andaman & Nicobar, Dadra & Nagar Haveli and Daman & Diu by opting to participate in UDAY, by way of cheaper funds for capex, reduction in AT&C and Transmission losses, interventions in energy efficiency, etc. during the period of turnaround.
The MoU paves way for improving the operational efficiency of the Electricity Departments/DISCOM of the State/Union Territory. Through compulsory distribution transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, feeder audit etc. AT&C losses and transmission losses would be brought down, besides eliminating the gap between the cost of supply of power and realisation.
While efforts will be made by the States/UTs to improve their operational efficiency, and thereby reduce the cost of supply of power, the Central Government would also provide incentives to the State/UTs for improving power infrastructure and for further lowering the cost of power.
UDAY or Ujwal Discom Assurance Yojna was launched in November 2015 to help loss-making discoms turn around financially, with support from their State governments.
The UDAY scheme is aimed at bringing ailing power distribution companies (discoms) to a state of operational efficiency, with state governments taking over up to 75% of their respective discoms’ debt and issuing sovereign bonds to pay back the lenders.
UDAY envisages a permanent resolution of past as well as potential future issues of the sector. The scheme seeks to achieve this through several simultaneous steps including reducing the interest burden on the discoms by allowing the states to take over the bulk of their debt, reducing the cost of power, and increasing the operational efficiencies of the discoms by providing capital and infrastructure like coal linkages.