UDAY targets FY18: Despite improvement, Rajasthan discoms lagging

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Although the three state-owned electricity distribution companies (discoms) of Rajasthan have managed to improve their performance on certain parameters of late, they are still far from achieving their operational targets set under the central government’s Ujwal Discom Assurance Yojana (UDAY). (Reuters)

Although the three state-owned electricity distribution companies (discoms) of Rajasthan have managed to improve their performance on certain parameters of late, they are still far from achieving their operational targets set under the central government’s Ujwal Discom Assurance Yojana (UDAY). The UDAY scheme comprises debt restructuring of the discoms to lower interest rates to financially turn around the distribution utilities. It has also set operational targets such as reduction in aggregate technical and commercial (AT&C) losses and annual power tariff revision to improve the finances of the discoms. Though Rajasthan’s discoms managed to reduce aggregate technical and commercial (AT&C) losses from the level before they joined UDAY in January 2016, they are still well behind meeting their AT&C loss reduction targets set for FY18. The state’s AT&C loss at the beginning of the scheme was a whopping 27.5%. Under UDAY, AT&C losses in FY18 should be 18.78%, way lower than the current level of 26.2%.

Similarly, under UDAY, the gap between the cost of supply and revenue realised (ACS-ARR gap) should be brought down to 25 paise/unit by the end of FY18. The current gap is 32 paise per unit. Disciplined AT&C loss reduction is a critical feature in lowering the financial conditions of the Rajasthan discoms.The ultimate UDAY target is to achieve AT&C loss-levels of 15% and eliminate ACS-ARR gap completely by FY19. Thanks to UDAY, the discoms, however, have saved about Rs 4,700 crore through lower interest costs , which helped them to reduce losses by 54% to Rs 5,208 crore in FY17.

The discoms of Rajasthan say they are taking steps for improvement in metering, billing and collection activities to improve the losses, but results of these are yet to be reflected in their financial positions. They have started 11 KV feeder wise energy accounting under the ‘Network Indexing Module’ (NIM), and they have appointed a consultant for energy audit of all subdivisions. The distribution-transformer-wise consumer indexing is under process.
Research firm Icra noted that after the liquidity relief achieved through UDAY, the pending receivables tenure for independent wind power producers has been reduced to three months.

The economic survey published by the finance ministry in August had said that the GFD/GSDP(gross state domestic product) for Rajasthan is seen to have doubled in FY17 from FY15 levels after issuing UDAY bonds worth Rs 59,722 crore.

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