Discoms’ debt recast plan will save Rs 1.8 lakh-cr annually: Goyal

Tribune News Service

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New Delhi, November 10

Minister for Power, Coal and Renewable Energy Piyush Goyal has said the newly unveiled debt restructuring plan for Discoms will lead to a saving of Rs 1,80,000 crore annually.

Named as UDAY (Ujjwal Discom Assurance Yojana), which also means dawn in English, the package involves a massive bailout plan for debt-ridden Discoms, besides measures to reduce power thefts, align consumer tariff with generation cost and promote energy efficiency.

In an interaction with investors, Goyal explained the new power sector reform initiative of the government. The Power Minister expressed confidence that UDAY would find pan-India acceptance.

Goyal said “It is a bottom-up approach, not a top-down approach. The states will be assisted and hand held to bring down the cost of power by improving their distribution, transmission and sub-transmission network, reducing the cost of power through coal rationalisation and also bringing down the interest cost substantially.”

He said the weakest aspect in the power sector was related to distribution, wherein Discoms have accumulated losses of approximately Rs 3.8 lakh crore and outstanding debt of Rs 4.30 lakh crore.

The minister said UDAY is also good news for the banking sector, which has a huge exposure to the near bankrupt state Discoms.

Under UDAY, states can take over 75% of their debt as on September 30, and pay back lenders by issuing bonds. This takeover of debt will not be added to the fiscal deficit of the states.

For the remaining 25%, the state electricity boards will issue bonds. The minister assured the investors that the sovereign, state and PSU bonds of India have never failed on payments.

He asserted that tariff increase was no substitute for efficiency improvement and added “regulators cannot pass on inefficiency of Discoms to consumers”.

The minister said the energy efficiency under UDAY would be achieved by reduction in interest rate, reduction in aggregate technical and commercial losses, increase in coal availability, improving billing and collection efficiency, and better demand-side management.

He said the National Domestic LED Programme alone, when fully implemented, will lead to reduction of consumer bills to the tune of Rs 40,000 crore, besides reducing peak load by 20,000 MW.