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Union Cabinet has given its nod to Ujwal DISCOM Assurance Yojna (UDAY) to ease the financial crunch facing power distribution companies, or discoms, which has impaired their ability to buy electricity. This scheme allows power Distribution Companies (DISCOMs) to convert their debt into state bonds in selected states as well as rise number of measures to upgrade efficiency at power plants.It has a clear focus on technological improvement, urges states to be accountable for losses and inefficiency of their distribution companies (discoms), and suggests measures for operational improvement.
The scheme was announced in the wake of state-owned discoms defaulting on their loans for years, leaving the banking sector exposed debt of as much as Rs 3.5 lakh crore.It is indeed an all-encompassing scheme for reforming the power distribution sector.
Salient Features of UDAY: The new scheme UDAY lays thrust on four initiatives for financial turnaround of Discoms.
Operational efficiency
Operational efficiency improvements like compulsory smart metering, upgradation of transformers, meters etc., energy efficiency measures like efficient LED bulbs, agricultural pumps, fans & air-conditioners etc. will reduce the average AT&C loss from around 22% to 15% and eliminate the gap between Average Revenue Realized (ARR) & Average Cost of Supply (ACS) by 2018-19.
Cost of Power
Reduction in cost of power would be achieved through measures such as increased supply of cheaper domestic coal, coal linkage rationalization; liberal coal swaps from inefficient to efficient plants, coal price rationalization based on GCV (Gross Calorific Value),
Financial turnaround- Alignment with State finances and reducing interst
Challenges
This is not the first attempt to restructure discoms in the country; previous attempts have failed miserably with states defaulting on the measures suggested by the Centre. Electricity is a state subject and the Centre can only be guiding authority. Of the three components of the power sector, generation and transmission are easier to turn around as these are with the Centre. However, distribution, which is with the states, is usually the broken link in the whole connection.
National Award winning documentary ‘Katiyabaaz’, based on power theft in the bustling industrial town of Kanpur started a conversation on the crumbling power distribution in the country, last year, the same year when NDA government came to power promising ‘24X7 Power for All’. A 'katiya' or 'kanta' or ‘kundi’ – as it is known in different parts of the country is not just a fatal attempt to get free access to power; it’s mockery of our power sector. This business of power theft, of politicians promising free power, and of local authorities turning a blind eye to it could impede the success of the ambitious UDAY scheme of the NDA government aimed at providing 24X7 power to all.
The reforms will have to fight such katiyabaazs at all levels. The Gujarat state government has asked the police force to join hands with the energy department to ensure ‘nuisance-free’ bill collection and metering. Coordinated efforts need an iron political will, a whip-cracking authority, and consumer awareness.
By: Vishal ProfileResourcesReport error
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