Ujwal DISCOM Assurance Yojana (UDAY)

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The Ujwal DISCOM Assurance Yojana (UDAY) was launched by the Government of India on 20-11-2015 for operational and financial turnaround of State owned Power Distribution Companies (DISCOMs). The participating States along with the DISCOMs have to enter into MoU with Government of India and take over 50% of outstanding debt as on 30-09-2015 by 31st March, 2016

Ujwal DISCOM Assurance Yojana (UDAY)

Objectives of Ujwal DISCOM Assurance Yojana

The objective of the scheme is to reduce the interest burden, reduce the cost of power, reduce power losses in Distribution sector, and improve operational efficiency of DISCOMs

Features of UDAY

  • Incentivizes the States by exempting State takeover of DISCOM debts from Fiscal Responsibility and Budget Management (FRBM) limits for two years
  • increased supply of domestic coal
  • coal linkage rationalization
  • liberally allowing coal swaps, allocation of coal linkages to States at notified prices

For Financial Turnaround

  • States will take over 75% of the DISCOM debt as on Sept 30, 2015 – 50% in FY 2015-16 and 25% in FY 2016-17.
  • States to issue non-SLR including SDL bonds, to take over debt and transfer the proceeds to DISCOMs in a mix of grant, loan, equity.
  • Maturity period of bonds – 10-15 years.
  • Moratorium period – up to 5 years.
  • Rate – G-sec plus 0.5% spread plus 0.25% spread for non-SLR.
  • Borrowing not to be included for calculating fiscal deficit of the State.

Achieving Financial Turnaround

  • Balance 25% of debt to remain with the DISCOMs in the following manner:
  • Issued as State-backed DISCOM bonds; or
  • Re-priced by Banks/FIs at interest rate not more than bank base rate + 0.10%
  • States to take over future losses of DISCOMs as per trajectory in a graded manner.
  • [0% of loss of 14-15 & 15-16; 5% of 16-17; 10% of 17-18; 25% of 18-19 & 50% of 2019-20]
  • Balance losses to be financed through State bonds or DISCOM bonds backed by State Govt guarantee, to the extent of loss trajectory finalised with MoP.
  • Jharkhand and J&K given special dispensation for take over of outstanding CPSU dues

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