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Sunday, January 22, 2017

Sikkim likely to join power distribution reform scheme UDAY next week

Sikkim is likely to join Ujjawal Discom Assurance Yojana (UDAY) next week taking the tally of states accepting the centre’s electricity distribution revival scheme to 22, amid growing focus on power reforms.
“A memorandum of understanding for this would be signed in 7-10 days,” said an official close to the development. The north-eastern state had an average AT&C loss level of 45.51 per cent, at the end of March 2015. The state government has projected bringing down the losses to 20 per cent by 2021-22.
UDAY was launched by the government in November 2015 to ensure financial stability for debt-ridden distribution utilities. Sikkim’s power department had nil outstanding debt at the end of March 2015, power minister Piyush Goyal had said in a written reply in Lok Sabha last August. 
UDAY involves several measures to support reform initiatives of states and discoms including demand side management, increased power supply in areas where aggregate technical and commercial (AT&C) losses are reduced, measures to reduce cost of power generation, reduction of interest costs and exemption of debt-taken over from borrowing limits under the Fiscal Responsibility and Budget Management (FRBM) Act.
Experts say it makes economic sense even for a non-debt state like Sikkim to be a part of the scheme. “For such states, there might be other incentives like loss reduction and improved supply of low cost electricity,” said a senior analyst from an accounting and consultancy firm.
So far, 92 per cent of the total debt of state discoms has been covered under UDAY. This includes Andhra Pradesh, Assam, Bihar, Chhattisgarh, Goa, Gujarat, Jammu & Kashmir, Jharkhand, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Punjab, Rajasthan, Telangana, Tamil Nadu, Uttar Pradesh, Uttarakhand and union territory of Puducherry.

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