States participating in the Ujwal DISCOM (distribution company) Assurance Yojana (UDAY) have taken over debt of ₹2.09 trillion (~$32.5 billion) from their DISCOMs. This is almost half of the ₹4.3 trillion (~$64 billion) of debt by state DISCOMs.
“The participating states have taken over the targeted debt of ₹2.09 trillion (~$32.5 billion) of their DISCOMs under borrowing exemption from the FRBM Act given in UDAY for the financial years (FYs) 2015-16 and 2016-17,” stated a government release.
The release also mentioned that the process of taking over the debts and issuing them as SDL bonds has now been complete. Currently, participating DISCOMs have to issue bonds worth approximately ₹370 billion (~$5.8 billion). The remaining debt of the DISCOMs is like CAPEX debt, which pays for itself, or can be put as program-based debt, which converts into grants fully or partially.
Mercom previously reported that in the first nine months FY 2016-2017, the interest costs of states and union territory DISCOMs that joined the UDAY program have been reduced by ₹119.89 billion (~$1.83 billion) compared to the same period in FY 2015-16.
Participating DISCOMs have achieved net savings of approximately ₹ 150 billion (~$2.3 billion) through to March, 2017. Further, in participating states, the average cost of supply (ACS) and average revenue realized (ARR) gaps have come down by almost 14 paise (~$0.0022)/unit, and aggregate technical and commercial (AT&C) losses have been reduced by almost 1 percent.
However, financial institutions and solar project developers have told Mercom that they are not seeing any positive effects of UDAY on the ground yet.
In accordance with protocols of the UDAY program, participating states will start taking over losses of DISCOMs in a graded manner, starting with the takeover of 5 percent of losses for the current financial year.
The UDAY program was launched in November 2015 to bring about the financial turnaround and revival of electricity distribution companies in India by reworking the ₹4.3 trillion (~$64 billion) in debt of utility distribution companies (DISCOM).