Andhra Pradesh became first state to join discom revival scheme UDAY

Andhra Pradesh on 5 December 2015 became the first state of India to join the Union Government’s Ujwal Discom Assurance Yojana (UDAY). The scheme aims at reviving debt-stressed power distribution companies.

Andhra Pradesh joined the scheme after the state gave in-principle nod to the Power Ministry for joining UDAY.

UDAY envisages reducing the interest burden, cost of power, and aggregate technical and commercial losses. Consequently, distribution companies would become sustainable to supply adequate and reliable power, enabling 24x7 power supplies.

The scheme is optional and operationalised through signing of MoU between state governments, state discoms and Union Government.

Other states to join UDAY scheme are Jharkhand (second state) and Rajasthan (third state).

Salient Features of UDAY
• States will take over 75 percent of DISCOM debt as on 30 September 2015 over two years.
• Union Government will not include the debt taken over by the states n the calculation of fiscal deficit of respective states in the financial years 2015-16 and 2016-17.
• States will issue non-SLR including SDL bonds in the market or directly to the respective financial institutions holding the DISCOM debt to the appropriate extent.
• States will take over the future losses of DISCOMs in a graded manner.
• States accepting UDAY and performing as per operational milestones will be given additional/priority funding through schemes of Ministry of Power and Ministry of New and Renewable Energy.
• States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.

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