Uttar Pradesh became the fourth state to join the Centre's scheme to revive state electricity distribution utilities on 30-01-16.
The state government signed a memorandum of understanding with the Centre and the Uttar Pradesh Power Corporation Ltd, the holding company of the various electricity distribution utilities in the state.
Under the Ujwal DISCOM Assurance Yojana (UDAY), the state government will take over ₹39,900-crore of debt of the electricity distribution utilities. The balance ₹13,300-crore of debt will be issued as state guaranteed DISCOM bonds at coupon rates that are 3 per cent lower than the current interest cost. This would help save the distribution utilities ₹1,600 crore annually.
Efficiency measures including reduction of AT&C losses will help bring additional revenue of ₹17,700 crore to the distribution utilities.
"Overall Uttar Pradesh will have savings of ₹33,000 crore over the next three years because of UDAY. It could possibly be more if consumption increases," said Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy.
The four states – Jharkhand, Chhattisgarh, Rajasthan and Uttar Pradesh – which have signed MoUs for joining UDAY, account for about 35 per cent of the outstanding loans of state electricity distribution utilities in the country.
Uttar Pradesh expects to start issuing the bonds by the second week of February. "There is very good investor appetite for the bonds. We have had discussions with insurance companies, provident fund organisations and liquidity does not appear to be a problem," Goyal added.
Source- The Hindu