FW: All about UDAY (Ujwal DISCOM Assurance Yojana) for financial turnaround of Power Distribution Companies: Oasis
sandeep...@kotak.com
Dear All,
Ujwal DISCOM Assurance Yojana (UDAY) provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem. UDAY is a path breaking reform for realizing the Hon’ble Prime Minister’s vision of affordable and accessible 24x7 Power for All. It is another decisive step furthering the landmark strides made in the Power sector over the past one and a half years, with the sector witnessing a series of historic improvements across the entire value chain, from fuel supply (highest coal production growth in over 2 decades), to generation (highest ever capacity addition), transmission (highest ever increase in transmission lines) and consumption (over 2.3 crore LED bulbs distributed).
- Salient Features of UDAY
i. States shall take over 75% of DISCOM debt as on 30 September 2015 over two years - 50% of DISCOM debt shall be taken over in 2015-16 and 25% in 2016-17.
ii. Government of India will not include the debt taken over by the States as per the above scheme in the calculation of fiscal deficit of respective States in the financial years 2015-16 and 2016-17.
iii. States will issue non-SLR including SDL bonds in the market or directly to the respective banks / Financial Institutions (FIs) holding the DISCOM debt to the appropriate extent.
iv. DISCOM debt not taken over by the State shall be converted by the Banks / FIs into loans or bonds with interest rate not more than the bank’s base rate plus 0.1%. Alternately, this debt may be fully or partly issued by the DISCOM as State guaranteed DISCOM bonds at the prevailing market rates which shall be equal to or less than bank base rate plus 0.1%.
v. States shall take over the future losses of DISCOMs in a graded manner and shall fund them as follows:
vi. State DISCOMs will comply with the Renewable Purchase Obligation (RPO) outstanding since 1st April, 2012, within a period to be decided in consultation with Ministry of Power.
vii. States accepting UDAY and performing as per operational milestones will be given additional / priority funding through Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY),Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or other such schemes of Ministry of Power and Ministry of New and Renewable Energy.
viii. Such States shall also be supported with additional coal at notified prices and, in case of availability through higher capacity utilization, low cost power from NTPC and other Central Public Sector Undertakings (CPSUs).
ix. States not meeting operational milestones will be liable to forfeit their claim on IPDS and DDUGJY grants.
x. UDAY is optional for all States. However, States are encouraged to take the benefit at the earliest as benefits are dependent on the performance.
Source: Press Information Bureau, Government of India
Note: The above material is just for our understanding.
Oasis
Thanks & Regards,
Kunal Sodhani |Currency Derivatives | kunal....@kotak.com
D:+91-22-66529127 (O) Cell: 9167049305
Kotak Securities Ltd.
Nirlon House, 3rd Floor,
Dr. Annie Besant Road,
Nr. Old Passport Office, Worli, Mumbai | 400 030 MH India.
Disclaimer:
This communication is intended only for the person or entity to which it is addressed and may contain confidential and / or privileged material. Any review, retransmission, dissemination or other use is prohibited. If you have received this in error, please contact the sender and delete this material from your computer. Kindly note that this mail does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information is not warranted as to completeness or accuracy and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Kotak Securities Limited.