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 SourcePIB
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