Why in News?
On the second anniversary of Ujwal DISCOM Assurance Yojana (UDAY) on Monday, the Government of India signed four Memoranda of Understanding (MoU) under the Scheme with Nagaland and Union Territories (UTs) of Andaman & Nicobar Islands, Dadra & Nagar Haveli & Daman & Diu for operational improvements.
These State/UTs have joined only for operational improvement and will not undergo financial restructuring/issue of bonds under the scheme. With the above, UDAY club has now grown to 27 states and 4 UTs.
What is it?
Ujwal DISCOM Assurance Yojana (UDAY) is the financial turnaround and revival package for electricity distribution companies of India (DISCOMs) initiated by the Government of India with the intent to find a permanent solution to the financial mess that the power distribution is in.
What are its objectives?
Ministry of Power, GoI launched Ujwal DISCOM Assurance Yojana (UDAY) which was approved by Union Cabinet on 5th November, 2015.
The scheme envisages:
• Financial Turnaround
• Operational improvement
• Reduction of cost of generation of power
• Development of Renewable Energy
• Energy efficiency & conservation
What are the benefits of it?
Reduction in Cost of power through Central Support
• Increased supply of domestic coal
• Allocation of coal linkages at notified prices
• Coal price rationalization
• Coal linkage rationalization & allowing coal swaps
• Supply of washed & crushed coal
• Additional coal at notified prices
• Faster completion of Interstate Transmission lines
• Power purchase through transparent competitive bidding
Additional priority funding under DDUGJY, IPDS, etc.
What these Mous are important?
• An overall net benefit of approximately Rs. 551 crores, Rs. 18 crores, Rs. 13 crores and Rs. 10 crores respectively would accrue to the State of Nagaland & UTs of Andaman & Nicobar, Dadra & Nagar Haveli and Daman & Diu by opting to participate in UDAY, by way of cheaper funds for capex, reduction in AT&C and Transmission losses, interventions in energy efficiency, etc. during the period of turnaround.
• The MoU paves way for improving operational efficiency of the Electricity Departments/DISCOM of the State/Union Territory. Through compulsory distribution transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, feeder audit etc. AT&C losses and transmission losses would be brought down, besides eliminating the gap between cost of supply of power and realisation.
• While efforts will be made by the States/UTs to improve their operational efficiency, and thereby reduce the cost of supply of power, the Central Government would also provide incentives to the State/UTs for improving power infrastructure and for further lowering the cost of power.