Bihar on Monday became the sixth state to join the Ujwal Discom Assurance Yojana (Uday) by signing a memorandum of understanding (MoU) with the Union power ministry in New Delhi.
Rajasthan, Uttar Pradesh, Chhattisgarh, Jharkhand and Gujarat are the other states that are already part of the Centre-sponsored scheme to provide relief to power distribution companies (Discoms) from the burden of debt and ensure operational, as well as, financial turnaround.
Union power minister Piyush Goyal was present on the occasion while his ministry's joint secretary A.K. Verma, Bihar energy secretary Pratyaya Amrit, North Bihar Power Distribution Company Limited (NBPDCL) managing director R. Lakshmanan and South Bihar Power Distribution Company Limited (SBPDCL) managing director Sandeep Kumar signed the MoU.
"We remain committed to all the projects that were announced as part of the Bihar package," Goyal said.
"These include quickly implementing Deen Dayal Upadhyay Gram Jyoti Yojana and Integrated Power Development Scheme so that power can reach every home in the state, deprived of electricity for nearly seven decades."
The Union minister also said that 981MW of power from Bhutan has been allotted to Bihar and from 1,310 MW will be given to the state from the thermal power plant that will come up at Buxar.
Bihar energy minister Bijendra Prasad Yadav spoke over phone during the signing of the MoU and thanked Goyal on behalf of the state. He assured that all targets given in the MoU would be achieved and hoped that more power will be allotted to the state.
Distribution companies in the country are reeling under heavy burden of debt, with total outstanding liabilities pegged at Rs 4.3 lakh crore as on September 30, 2015.
Of this, the outstanding by six states that have accepted Uday collectively amounts to around 33 per cent or Rs 1.40 lakh crore. This debt will be restructured in a target-bound manner.
As per the MoU, savings in interest cost, reduction in aggregate technical and commercial (AT & C) and transmission losses, coal reforms and other initiatives will help give Bihar around Rs 9,000 crore.
Out of NBPDCL and SBPDCL's total outstanding debt of Rs 3,110 crore as on September 30, 2015, the state government will take over Rs 2,332 crore or 75 per cent in two years, while the balance of Rs 778 crore will be re-priced or issued as state guaranteed Discom bonds at coupon rates around 3 per cent less than the average existing interest rate.
This would give Bihar an annual saving in interest cost to the tune of Rs 117 crore.
The biggest chunk of financial benefit will come from reduction in AT & C losses and transmission losses of around Rs 6,650 crore during the turnaround.
Coal reforms in the state, which include swapping of coal linkages, correction in coal grade slippage and 100 per cent washed coal supply will help the state reduce cost of power and provide Rs 1,086 crore of financial benefits.
