UDAY Scheme

Context: The Union Minister for Power and New & Renewable Energy has informed about the status of repayment of the bonds issued by the State Governments and the DISCOMs under the UDAY scheme. About UDAY SCHEME:

• The Ujwal Discom Assurance Yojana (UDAY) was launched by the Ministry of Power in November 2015.
• Aim: To improve the financial health and operational efficiency of state-owned distribution companies (discoms) across the country.
• State Issuance of non-SLR Bonds: State will issue non-SLR (Statutory Liquidity Ratio) including SDL (State Development Loans) bonds in the market or directly to the respective bank/ financial Institution holding the DISCOM debts to the appropriate extent.
• Transfer of Proceeds to DISCOMs: The funds realized from the bond issuance will be entirely transferred by the state to the respective DISCOMs.

Objectives of Scheme:

• Financial turnaround
• Operational improvement
• Reduction of cost of generation of power
• Development of Renewable Energy
• Energy efficiency & conservation

Key benefits for the states participating in UDAY:

• 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
• Additional priority funding under schemes like Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), etc.

Targets to be met by states under UDAY:

• Deb Takeover:
  • States to take over 75% of the outstanding debt of their discoms (accumulated till 2015) over two years (50% in 2015-16 and 25% in 2016-17).
• Progressive Funding of DISCOM Losses: 
  • They were also required to progressively fund a greater share in losses of discoms from their budgetary resources (10% in 2018-19, 25% in 2019-20, and 50% in 2020-21).
• Operational Targets: 
  • In addition, UDAY specified certain operational targets such as achieving 15% AT&C losses by 2018-19 at the national level.

News Source: PIB