Powering down: Most discoms miss key UDAY targets for FY17
In what seems a throwback to history, only six states and one Union Territory among the 31 that had signed up since November 2015 for the power discoms’ revival scheme Ujwal Discom Assurance Yojana (UDAY) have reported meeting the respective FY17 targets to reduce aggregate technical and commercial (AT&C) losses. Also, only 10 UDAY states/UTs managed to narrow the gap between their discoms’ costs of power supply and revenue realised (ACS-ARR gap) to the earmarked levels for the year. Only 23 states and the UT of Puducherry have submitted the relevant FY17 data to the Union power ministry, which is monitoring the progress of the scheme, so far. The considerable slippage in achieving the two key technical parameters after almost the entire country has adopted UDAY in FY16 raises the threat of an unravelling of the scheme, even as the discoms have managed to substantially reduce their debt and interest costs thanks to UDAY. Unless the technical parameters, which includes timely tariff revisions, are meticulously met, the discoms could again plunge themselves into a crisis. An earlier attempt by the UPA government to salvage the discoms had come a cropper as these entities, often victims of populist policies implemented by state governments, could not comply with the targets. Under the UPA’s Financial Restructuring of State Distribution Companies (Discoms) Scheme launched in FY12, states were asked to take 50% outstanding short-term liabilities, whereas the discoms were asked to issue state government-backed bonds and were given some targets like regular tariff revisions, etc.