The Andhra Pradesh government has conveyed its in-principle decision to the Ministry of Power of joining UDAY (Ujwal Discom Assurance Yojana) scheme.
On receiving the official communication, Piyush Goyal, Union Minister of State (IC) for Power, Coal and New & Renewable Energy, lauded Chief Minister of Andhra Pradesh N Chandrababu Naidu for joining the scheme.
Last month, Goyal said several States had welcomed the UDAY scheme and five-six of them were expected to sign the MoUs soon.
In his tweets, Goyal said UDAY has been launched to improve financial and operational efficiencies of power distribution companies (Discoms).
It seeks to reduce interest burden, cost of power and transmission and commercial losses. Consequently, Discom would become sustainable to supply adequate and reliable power enabling 24x7 power supply. The scheme provides that States would take over 75 per cent debt of Discoms, as on September 30, 2015 in two years.
Incentives The UDAY scheme has inbuilt incentives encouraging State governments to voluntarily restructure their debts. These incentives include taking over of Discom debt by the States outside the fiscal deficit limits, reduction in the cost of power through various measures such as coal linkage rationalisation, liberal coal swaps, coal price rationalisation, correction in coal grade slippage, allocation of coal linkages at notified prices, priority/additional funding through schemes of Ministry of Power and Ministry of New and Renewable Energy and, reduction in interest burden.
The scheme is different from earlier restructuring schemes in several ways, including flexibility of keeping debt taken over outside fiscal deficit limit, reduction in cost of power and a series of time bound interventions for improving operational efficiency. It provides for measures that will reduce the cost of power generation, which would ultimately benefit consumers.