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HomePoliticsIndiaUDAY to save costs, increase power efficiency for Chhattisgarh

UDAY to save costs, increase power efficiency for Chhattisgarh

New Delhi: The Government of India, the State of Chhattisgarh and the Chhattisgarh State Power Distribution Company Limited (CSPDCL) signed a Memorandum of Understanding (MoU) under the Scheme UDAY (Ujwal discom Assurance Yojana) today for operational and financial turnaround of the CSPDCL.

Chhattisgarh will derive an overall net benefit of approximately Rs 3,100 crore through UDAY. The scheme was launched by the Government of India on 20 November last year to ensure a sustainable solution to enable distribution utilities across the country to break out of a long-standing debt of almost Rs 4.3 lakh crore.

The signing of the MoU would have significant benefits for CSPDCL, with Chhattisgarh taking over 75% of the outstanding debt of CSPDCL as existing on 30 September 2015 and the balance debt re-priced or issued as state-guaranteed discom bonds, at coupon rates of around 3% less than the average existing interest rate. The discoms’ debt would reduce from Rs 1,740 crore to Rs 435 crore. The CSPDCL would have an annual saving of about Rs 52 crore as the annual interest cost through reduction of debt and reduced interest rates on the balance debt.

Sustainability of operational and financial performance is at the core of UDAY. Through this scheme, Chhattisgarh and CSPDCL is ex[pected to bring in operational efficiencies through compulsory feeder and distribution transformer metering, consumer indexing & GIS mapping of losses, upgrade or change transformers, meters etc, smart metering of high-end consumers, reduction in transmission losses and increased power supplies in areas with reduced AT&C losses. Just the reduction in AT&C losses and transmission losses is likely to bring additional revenues of around Rs 2,350 crore to the CSPDCL till the year 2019.

The demand-side interventions in UDAY, such as usage of energy-efficient LED bulbs, fans and airconditioners and efficient industrial equipment through PAT (perform, achieve, trade) would help reduce peak load, flatten load curve and thus reduce energy consumption in Chhattisgarh. The gain is expected to be around Rs 630 crore till FY 19.

The Government of Chhattisgarh has committed to improving the billing from 79.27% in FY 16 to 85.28% in FY 19. The gap between the average cost of supply (ACS) and average revenue realisation (ARR) of Rs 0.35 per unit in FY 15 will also be eliminated. The State government will extend a graded operational funding requirement (OFR) support of Rs 450 crore in FY 16 and Rs 350 crore in FY 17 to the CSPDCL to ensure smooth cash flow till the discoms achieve a turnaround.

The Union government will provide incentives to the discoms and the State government, aimed at improving power infrastructure growth in Chhattisgarh and lowering the cost of power. Chhattisgarh will get additional or priority funding through central schemes such as DDUGJY, IPDS, Power Sector Development Fund or schemes of MOP and MNRE if they meet the operational milestones outlined in the scheme. With the financial turnaround through financial and operational efficiencies, discom ratings are likely to improve, reducing their cost of borrowing for future capital investment requirement for sustainable operational improvements.

The people of Chhattisgarh will be the biggest beneficiaries of this MOU. An increased demand for power from discom would mean higher PLF of generating units and, therefore, lesser cost per unit of electricity thereby benefitting consumers. The scheme will allow speedy availability of power to around 885 villages and 9.88 lakh households in Chhattisgarh that are still without electricity. Availability of 24×7 power to hitherto unconnected villages/households etc. will increase the economic activity and improve employment opportunities, which would reduce the influence of Maoist ideologues, restoring normalcy of life and further accelerate the economic growth of the State.

The signing of this MoU under UDAY will accelerate the process of reform across the entire power sector and will ensure 24×7 power for all at affordable rates.

Minister of State (IC) for Power, Coal and New & Renewable Energy Piyush Goyal witnessed the signing ceremony ion the capital today.

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