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Photo Courtesy- www.business-standard.com
Photo Courtesy- www.business-standard.com

Bihar Joins UDAY Scheme, Sixth State to Sign MoU

The Government of India, the State of Bihar and the DISCOMs of Bihar (North Bihar Power Distribution Company Limited, and South Bihar Power Distribution Company Limited) signed Memorandum of Understanding (MOU) under the Scheme UDAY (Ujwal DISCOM Assurance Yojana) on Monday for operational and financial turnaround of the DISCOMs. The signing ceremony was held in the august presence of the Minister of State for Power Shri Piyush Goyal.

  • The MoUs was signed on behalf of Ministry of Power by Dr A K Verma, Shri Pratyaya Amrit , Secretary Energy on behalf of  State Government of Bihar and on behalf of two DISCOMs by  Shri R Lakshmanan , MD, North Bihar Power Distribution Company Limited and Shri Sandeep Kumar MD ,South Bihar Power Distribution Company Limited .
  • On the occasion, Power Minister Piyush Goyal said that their focus has been the development of the eastern part of India and the government is putting its full efforts to help that part develop. He also said that his department is working hard to bring a major change in the power sector in Bihar.
  • The Distribution Utilities of the country are reeling under heavy debt burden. As on 30thSeptember, 2015, the outstanding debt of the DISCOMs stood at Rs.4.3 lakh crore.  In order to bring relief to these Utilities from the burden of debt, and to improve their overall performance, Government of India launched the Scheme UDAY on 20th November, 2015, after a series of discussions with all the stakeholders, namely the State Governments, DISCOMs, lenders etc. UDAY aims to ensure a permanent solution to the debt-ridden Distribution utilities to achieve financial stability and to improve their operational efficiencies, for sustained growth.
  • Bihar is the sixth State to accept UDAY for bringing about a positive change in the Power Sector scenario of the States. Rajasthan, Uttar Pradesh, Chhattisgarh and Jharkhand have already signed the MoU under UDAY for operational and financial turnaround of DISCOMs.  With the signing of MoU with Bihar, approximately 33% of the DISCOM debt, ie. around Rs.1.40 lakh crore, would be restructured. Gujarat has also signed the MoU for operational turnaround, considering the healthy financial position of the DISCOMs of the State.
  • The Government of Bihar has taken a major step towards improving the financial health of the DISCOMs by signing the MOU under UDAY and agreeing to take over the debt of the DISCOMs. The Government of Bihar would take over Rs.2332 cr. of DISCOM debt, being 75% of the total DISCOM debt of Rs.3110 cr. outstanding as on 30.09.2015, as envisaged in the scheme. The scheme also provides for the balance debt of Rs.778 cr. to be re-priced or issued as State guaranteed DISCOM bonds, at coupon rates around 3% less than the average existing interest rate. The annual saving in the interest cost to the State would be around Rs.117 cr. on account of restructuring of the DISCOM debt.
  • UDAY not only focuses on bringing about financial turnaround of the DISCOMs. It also lays stress on improving operational efficiencies of the DISCOMs. In order to bring about a sustainable turnaround of the DISCOMs, the State of Bihar and the DISCOMs will improve operational efficiency through compulsory Feeder and Distribution Transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, thereby bringing about reduction in transmission losses and AT&C losses, besides eliminating the gap between cost of supply of power and realization. The reduction in AT&C losses and transmission losses to 15% and 4% respectively is likely to bring additional revenue of around Rs.6650 cr. during the period of turnaround.
  • With the financial turnaround through financial and operational efficiencies, the rating of the DISCOMs would improve, which would help them in raising cheaper funds for their future capital investment requirement. This is expected to provide interest cost saving of around Rs.80 cr. to the DISCOMs.
  • While efforts will be made by the State Government and the DISCOMs to improve the operational efficiency of the DISCOMs, and thereby reducing the cost of power supply, the Central government would also provide incentives to the DISCOMs and the State Government for improving Power infrastructure in the State and for further lowering the cost of power. The Central schemes such as DDUGJY, IPDS, Power Sector Development Fund or such other schemes of MOP and MNRE are already providing funds for improving Power Infrastructure in the State and additional/priority funding would be considered under these schemes,  if the State/DISCOMs meet the operational milestones outlined in the scheme.
  • The State would also be supported through additional coal at notified prices and in case of availability through higher capacity utilization, low cost power from NTPC and other CPSUsOther benefits such as coal swapping, coal rationalization, correction in coal grade slippage, availability of 100% washed coal would help the state to further reduce the cost of Power. The State would gain around Rs.1086 cr. due to these coal reforms.
  • The ultimate benefit of the MOU would go to the people of Bihar. Higher demand for power from DISCOMs would mean higher PLF of Generating units and therefore, lesser cost per unit of electricity thereby benefitting consumers. The DISCOMs would also increase power supply in areas with reduced AT&C losses. The scheme would allow speedy availability of power to around 1152 villages and 160.60 lakh households in Bihar that are still without electricity. Power would be supplied to unconnected villages/households 24×7. This thus would boost the economy, promote industries, thereby improving employment opportunities and see Bihar develop into one of the leading industrialized States in India.

(Source: PIB)

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