Interest Costs of DISCOMs Reduced by Rs.119.89 Billion (~$1.83 Billion) Under UDAY Program


In the first nine months of India’s current financial year (FY) 2016-2017, the interest costs of states and union territory DISCOMs that have joined the Ujwal DISCOM (distribution company) Assurance Yojana (UDAY) program have been reduced by Rs.119.89 billion (~$1.83 billion) compared to the same period in FY 2015-16.

The UDAY program provides working capital debt financing by banks and financial institutions to DISCOMs, and only to the extent of 25 percent of their previous year’s revenue, stated Mr. Piyush Goyal, Minister for Power, in the Rajya Sabha.

Out of the existing state-owned power distribution utilities debt of Rs.3,754.30 billion (~$57.31 billion), UDAY states account for Rs.3,561.52 billion (~$54.37 billion) as of 31-03-2015, added Mr. Goyal in the Rajya Sabha.

Interest costs have been a part of the financial concerns that DISCOMs in the India face today. If this goes down, a considerable amount of pressure will be relieved, stated an MNRE official. Interest costs resulted in an increase in the combined DISCOM debt, added the MNRE official.

The UDAY program was launched in 2015 for the financial and operational turnaround of DISCOMs in the country. Mercom previously reported, a total of ~Rs.2.07 trillion (~$30.99 billion) DISCOM debt has been restructured under the UDAY program.

Mercom also reported that the year 2020 is the expected breakeven point for most states and union territories that have joined the UDAY program.

Image Credit: CC BY-SA 3.0 Nick Youngson