States That Miss UDAY Targets to Face Fund Cuts: R K Singh

The Centre has proposed a reduction in funds of the states that miss targets set under the 2nd version of UDAY scheme, which is at the draft stage

The Centre has proposed a reduction in power sector funds of the states that would not maintain performance benchmarks set under the second version of Ujwal Discom Assurance Yojana (UDAY) scheme, which is at the draft stage, Power Minister R K Singh has said. 

The government plans the second wave of reforms in the power distribution sector and has shared the draft with states, the minister told reporters during the launch of the State Solar Rooftop Attractiveness Index (SARAL) on the sidelines of the annual Review and Planning Meeting being held with all the states and power Discoms.

The Centre in November 2015 had launched the UDAY scheme to bring about the operational and financial turnaround of debt-laden power distribution companies.

“We have planned the second wave of distribution reforms and shared the draft with states. We are going to combine the features of UDAY scheme (meant for revival of debt-laden discoms) Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS),” the power minister said.

Elaborating further, the minister said, “We would add features like system strengthening, expansion of access, loss reduction and reforms in one package. The funds would be targeted towards exceeding those reforms (targets). The funds’ release would fall if the trajectory of loss reduction (by discoms) and reforms reduce. It would happen quickly.”

Finance Minister Nirmala Sitharaman in her budget speech last month had said, “Our government launched UDAY in 2015 aimed at the financial and operational turnaround of Discoms. The government is examining the performance of the scheme and it will be further improved.”

The UDAY scheme was aimed at reducing interest burden, cost of power and losses in the distribution sector, besides improving the operational efficiency of discoms within a turnaround period of three years.

A recent report by the  Central Electricity Authority (CEA) has revealed that the power distribution companies (Discoms) across the country owe close to Rs 6872 crore to renewable energy developers in payment dues up to August 16, 2019. And that Discoms in Andhra Pradesh, Telangana, and Karnataka owe close to 70 percent of the total amount that is due. Andhra Pradesh with its recent PPA skirmish, which now seems to have taken a fresh turn owes what is nearly 40 percent of the total dues at Rs 2,591 crore.

Speaking about the controversy over renewable power tariffs in Andhra Pradesh, Singh said, “The Andhra Pradesh Government has clarified that they would not open all PPAs (power purchase agreements). It would be only cases, where there is manifest wrongdoing.”