Lok Sabha Question No. 4609 (UNSTARRED), answered on 2016-12-15
Subject: UDAY
Ministry: POWER
Asked by: K. MARAGATHAM, SRINIVAS KESINENI, GAJENDRA SINGH SHEKHAWAT, KANWAR SINGH TANWAR

## GOVERNMENT OF INDIA

## MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.4609 TO BE ANSWERED ON 15.12.2016

## UDAY

4609. SHRIMATI K. MARAGATHAM:

SHRI KESINENI NANI:

SHRI GAJENDRA SINGH SHEKHAWAT:

SHRI KANWAR SINGH TANWAR:

Will the Minister of POWER be pleased to state:

- (a) whether a number of States have joined the Ujwal Discom Assurance Yojana (UDAY);
- (b) if so, the details thereof;
- (c) whether it is financially prudent to bail out distribution companies again  and  again  using  taxpayers'  money  when  State  Electricity  Boards were  supported  under  the  Financial  Restructuring  Plan  of  2001  and  yet they are in a similar situation now, and if so, the details thereof and the justification therefor;
- (d) the  manner  in  which  the  Union  Government  proposes  to  ensure accountability  and  monitoring  of  finances  of  distribution  companies  so that they are not in a similar situation again in the future; and
- (e) whether the Union Government proposes to permit State Governments for transfer of funds relating to UDAY Scheme in the form of loan  (50%)  instead  of  grant  (75%)  and  equity  (25%)  as  indicated  in  the UDAY  scheme  and  if  so,  the  details  thereof  and  if  not,  the  reasons therefor?

## A N S W E R

THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER, COAL, NEW & RENEWABLE ENERGY AND MINES

( SHRI  PIYUSH GOYAL )

- (a) & (b) : Yes, Madam. So far, seventeen States and one Union Territory viz. Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Goa, Gujarat, Haryana,  Himachal  Pradesh,  Jammu  &  Kashmir,  Karnataka,  Madhya Pradesh,  Maharashtra,  Manipur,  Rajasthan,  Uttar  Pradesh,  Uttarakhand, Punjab  and  Puducherry  have  joined  Ujwal  DISCOM  Assurance  Yojana (UDAY).

.............2.

(c) : The dues of State Power Distribution Utilities are contingent liabilities of the States and UDAY  recognizes  this. The  Financial Restructuring Plan (FRP) was formulated in the year 2012 and provided for financial support from the Government of India; however, under UDAY, no such financial support from the Government of India is envisaged.

(d) & (e) : Under  UDAY,  all  participating  DISCOMs/States  have  entered into a Memorandum of Understanding (MOU) with the Government of India, which includes operational and financial turnaround commitments in the form of well defined trajectories.  UDAY  incorporates  several fiscal prudence  measures  on  part  of  the  participating  States/DISCOMs,  which include  Banks  and  Financial  Institutions  (FIs)  not  funding  any  further losses;  all  loss  financing  to  be  carried  out  only  within  the  defined  loss trajectories; Working capital financing by Banks/FIs restricted to only 25% of last years revenue; and future takeover of DISCOM losses by the State Government in a graded manner.

UDAY  provides  that  the  transfer  of  75%  debt  of  DISCOMs taken over by the States during 2015-16 & 2016-17, is as a grant. UDAY further provides that in case the State is not able to absorb the interest burden of the entire grant immediately, the transfer of grant can be spread over  three  years,  i.e  25%  in  each  of  the  three  years  with  the  remaining transfer through State loan to the DISCOM. For States with high DISCOM debt, this period can be further relaxed by 2 years in consultation with the Ministry of Power.

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