Punjab Joins “UDAY” Scheme

The Government of India, the State of Punjab and the Punjab State Power Corporation Limited (PSPCL) which takes care of the power distribution activity of Punjab signed Memorandum of Understanding (MOU) under the Scheme UDAY – “Ujwal DISCOM Assurance Yojana”, for operational and financial turnaround of the DISCOMs. The signing ceremony was held in the august presence of the Union Minister of State for Power (IC) Piyush Goyal and Deputy Chief Minister of Punjab, Sukhbir Singh Badal. Speaking on the occasion, Goyal said that Punjab will be highly benefitted by the UDAY especially the farmers and the industrialists. He also assured that the Power Ministry is in discussion with the Punjab Government about replacing all old water pumps with the improved, technologically advanced and energy efficient water pumps in the state. While, Badal appreciated the Power Minister for taking India from being power deficit country towards power surplus country and said that UDAY will be tackling total discom debt of Rs.20838 and thus revive the power sector of the state. Under UDAY, seven states have signed MoU till date. The combined DISCOM debt that would be restructured in respect of these states is around Rs.1.6 lakh crore, which is approximately 37% of the total outstanding DISCOM debt of Rs.4.3 lakh crore as on 30th September, 2015. Today the Government of Punjab has taken a positive step towards supporting its DISCOM by signing the MOU under UDAY and agreeing to take over the debt of the DISCOM gradually. The Government of Punjab would take over Rs.15628 crore of DISCOM debt, being 75% of the total DISCOM debt of Rs.20838 crore outstanding as on 30.09.2015, as envisaged in the scheme. The scheme also provides for the balance debt of Rs.5210 crore 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 State would be around Rs.625 crore on account of restructuring of the DISCOM debt. Besides trying to support the DISCOM financially, the MoU paves way for further improving operational efficiency of the already efficient DISCOM. 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 losses and transmission losses would be brought down, besides eliminating the gap between cost of supply of power and realisation. The reduction in AT&C losses and transmission losses to 14% and 2.5% respectively is likely to bring additional revenue of around Rs.1600 crore during the period of turnaround. The above measures would help improve the rating of the DISCOM, 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.60 crore to the DISCOMs. While efforts will be made by the State Government and the DISCOM 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.1250 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 Punjab. The gain is expected to be around Rs.690 crore. An overall net benefit of approximately Rs.5475 crore would accrue to the State by opting to participate in UDAY, by way of savings in interest cost, reduction in AT&C and transmission 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 Punjab. Reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers. Further, financially and operationally healthy DISCOM would be in a position to supply more power. Higher demand for power from DISCOM 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.