OREANDA-NEWS. The Government of India, the State of Madhya Pradesh and the DISCOMs of Madhya Pradesh (MP Poorva Kshetra Vidhyut Vitran Nigam Ltd., MP Paschim Kshetra Vidhyut Vitran Nigam Ltd. and MP Madhya Kshetra Vidhyut Vitran Nigam Ltd.) signed Memorandum of Understanding (MOU) under the Scheme UDAY – “Ujwal DISCOM Assurance Yojana” today for operational and financial turnaround of the DISCOMs. The signing ceremony was held in the august presence of the Minister of State ( IC) for Power, Coal & New and Renewable Energy  & Mines Shri Piyush Goyal here today.

Besides the State of MP, Union Territory of Puducherry has also signed MoU under UDAY today. With these two State/UT joining the Scheme, the number of States/UT that have joined UDAY goes up to 16. The combined DISCOM debt (including CPSU dues) that would be restructured in respect of these states is around Rs.2.51 lac crore as on 30th September, 2015.

Today the Government of Madhya Pradesh has taken a positive step towards supporting its DISCOMs by signing the MOU under UDAY and agreeing to take over the debt of the DISCOMs gradually. The Government of Madhya Pradesh would be taking over its own loan to DISCOMs and enable the DISCOMs to reduce interest cost, as part of the Scheme. The amount of debt being taken over by the State is Rs.26055 cr., being 75% of the total DISCOM debt of Rs.34739 cr. outstanding as on 30.09.2015, as envisaged in the scheme. The scheme also provides for the balance debt of Rs.8684 cr. to be re-priced or issued as State guaranteed DISCOM bonds, at coupon rates around 3% less than the average existing interest rate. The annual saving in the interest cost to the DISCOMs would be around Rs.2215 crore on account of restructuring of the DISCOM debt.

Besides trying to support the DISCOMs financially, the MoU paves way for further improving operational efficiency of the DISCOMs. Through compulsory Distribution Transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, feeder audit etc. AT&C loss would be brought down, besides eliminating the gap between cost of supply of power and realisation. The reduction in AT&C loss to 15% is likely to bring additional revenue of around Rs.8523 cr. during the period of turnaround.

The above measures would help improve the rating of the DISCOMs, which would help them in raising cheaper funds for their future capital investment requirement. This is expected to provide interest cost saving of around Rs.80 crore to the DISCOMs.

While efforts will be made by the State Government and the DISCOMs to improve the operational efficiency of the DISCOM, and thereby reduce the cost of supply of power, the Central government would also provide incentives to the DISCOMs and the State Government for improving Power infrastructure in the State and for further lowering the cost of power. The Central schemes such as DDUGJY, IPDS, Power Sector Development Fund or such other schemes of MOP and MNRE are already providing funds for improving Power Infrastructure in the State and additional/priority funding would be considered under these schemes,  if the State/DISCOMs meet the operational milestones outlined in the scheme. The State shall also be supported through additional coal at notified prices and in case of availability through higher capacity utilization, low cost power from NTPC and other CPSUs. Other benefits such as coal swapping, coal rationalization, correction in coal grade slippage, availability of 100% washed coal would help the state to further reduce the cost of Power. The State would gain around Rs.4225 crore due to these coal reforms.

Demand Side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & air-conditioners and efficient industrial equipment through PAT (Perform, Achieve, Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in the State of Madhya Pradesh. The gain is expected to be around Rs.1560 crore.

An overall net benefit of approximately Rs.17515 crore would accrue to the State by opting to participate in UDAY, by way of savings in interest cost, reduction in AT&C losses, interventions in energy efficiency, coal reforms etc. during the period of turnaround.

The ultimate benefit of signing the MOU would go to the people of Madhya Pradesh. Reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers. Further, financially and operationally healthy DISCOMs would be in a position to supply more power. Higher demand for power from DISCOMs would mean higher PLF of Generating units and therefore, lesser cost per unit of electricity which would again mean lesser cost per unit of electricity to the consumers. Thus, the scheme would allow speedy availability of cheaper power to around 131 villages and 52.86 lac households in the State that are still without electricity. Availability of 24x7 power to hitherto unconnected villages/households etc. would boost the economy, provide more employment opportunities for the people of the State and thereby, improve the standard of living of the people of the State