UDAY is the Centre’s scheme to rescue the country’s ailing state power distribution utilities (discoms). And it is supposed to be nothing short of a new dawn for them, the books of the State discoms are to be purged of their massive losses and mounting debt, paving the way for them to be operationally viable.
Features of the Scheme
For Financial Turnaround
- States will take over 75% of the DISCOM debt as on Sept 30, 2015 – 50% in FY 2015-16 and 25% in FY 2016-17.
- States to issue non-SLR including SDL bonds, to take over debt and transfer the proceeds to DISCOMs in a mix of grant, loan, equity.
- Maturity period of bonds – 10-15 years.
- Moratorium period – up to 5 years.
- Borrowing not to be included for calculating the fiscal deficit of the State.
- Balance 25% of debt to remain with the DISCOMs in the following manner:
. Issued as State-backed DISCOM bonds; or
. Re-priced by Banks/ FIs at interest rate not more than bank base rate + 0.10%
- States to take over future losses of DISCOMs as per trajectory in a graded manner.
[0% of loss of 14-15 & 15-16; 5% of 16-17; 10% of 17-18; 25% of 18-19 & 50% of 2019-20] - Balance losses to be financed through State bonds or DISCOM bonds backed by State Govt guarantee.
Advantages of the Scheme
- Financially & operationally sound DISCOMs
- Increased demand for power
- Improvement in PLF of generating plants
- Reduction in stressed assets
- Availability of cheaper funds
- Increased capital investment
- Development of renewable energy sector
Source: UDAY website
