Discoms Make A Rs 12,000 Crore Saving On Interest Outgo After States Take Over Debt

The centre’s Ujwal Discom Assurance Yojna (UDAY) has helped power distribution companies (discoms) save Rs 12,000 crore interest outgo, reported the Economic Times today (5 July). The states have taken over the debt instead, as directed by the terms of UDAY agreements – 16 state governments lifting a debt of around Rs 2.08 lakh crore.

The states will not have to bear the burden at interest rates of 11-12 per cent, though. It will be lower, at 7-8.5 per cent, and even lower for some discoms which have restructured their balance-loan proportion, the daily quotes the Power Ministry as having said Tuesday (4 July).

The difference between the cost of power supply and revenue has come down from 59 paise in fiscal year 2016 to 45 paise in 2017, thanks to reduced interest outgo, tariff rationalisation and improved billing.

The key to the success of UDAY was always going to hinge on the participation of the states. This is, then, surely a positive sign.