Ujwal Discom Assurance Yojna

Ujwal Discom assurance Yojna

  1. Introduction
  2. Scheme Components
  3. Salient features
  4. Benefits
  5. Impact

Introduction

Ujjwal DISCOM Assurance Yojana is the financial turnaround and revival package for electricity distribution companies of India initiated by the Government of India with the intent to find a permanent solution to the financial mess that the power distribution is in.

The Scheme Envisages

  1. Financial Turnaround
  2. Operational improvement
  3. Reduction of cost of generation of power
  4. Development of Renewable Energy
  5. Energy efficiency & conservation

Salient Features of the Scheme

For Financial Turnaround

  1. 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.
  2. 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.
  3. Maturity period of bonds – 10-15 years.
  4. Moratorium period – up to 5 years.
  5. Rate – G-sec plus 0.5% spread plus 0.25% spread for non-SLR.
  6. Borrowing not to be included for calculating fiscal deficit of the State.

Achieving Financial Turnaround

  • 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, to the extent of loss trajectory finalised with MoP.
  • Jharkhand and J&K given special dispensation for take over of outstanding CPSU dues

Benefits to Participating States

  • Reduction in Cost of power through Central Support
  • Increased supply of domestic coal
  • Allocation of coal linkages at notified prices
  • Coal price rationalization
  • Coal linkage rationalization & allowing coal swaps
  • Supply of washed & crushed coal
  • Additional coal at notified prices
  • Faster completion of Interstate Transmission lines
  • Power purchase through transparent competitive bidding

Impact 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