Uday Agreement

New Delhi: The government`s debt restructuring programme for public energy suppliers – Ujwal Discom Insurance Yojana or UDAY – is not limited to a simple re-edration of credit, but aims to reverse troubled entities, by further monitoring state governments, shows the fine print of the UDAY agreements signed between the Centre and nine states and their electricity suppliers. In order to address the problem of irregular payments by discomoses, a high-level plenipotentiary committee (HLEC), headed at the time by PK Sinha, then cabinet secretary, had proposed a model in which debts on dismass would be recorded and a down payment would be made to electricity producers. If these lenders did not recover the taxes, the RBI could deduct the amount from the state account and pay these financial institutions from the public sector. «After a thorough review of the problem and an analysis of the realities of the soil, the HLEC found that the tripartite agreement was the most credible mechanism to address the situation of late payment of levies in the event of a default of more than six months, and it is the most effective way to attract investment in the energy sector and put the sector back on the path to sustainable growth.» «» said Ashok Kumar Khurana, Executive Director of the Power Producers Association. The program was announced by Piyush Goyal, Minister of State for Energy, Coal and Renewable Energy (now Minister of Railways and Minister of Coal) in November 2015. The scheme is optional for states to be able to join. Jharkhand was the first state to enter the UDay system. Other states that have agreed in principle are Gujarat, Chhattisgarh, Andhra Pradesh, Karnataka, Rajasthan, Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh, Madhya Pradesh, Uttarakhand, Telangana, Assam. [2] In addition, such agreements will control populist measures such as free power, as costs will eventually return with interest to the taxpayer. Energy Ministry officials said the parameters of the agreement had been concluded with a strict monitoring clause. The MoU lists a range of centrally sponsored funds for discos when they achieve the required operational efficiency. The parameters are divided into three parts: financial, operational and monthly monitoring. Copies of the agreements were published on 17 March by the EU Ministry of Power.

The states that signed the agreements are Bihar, Chhattisgarh, Gujarat, Haryana, Jammu and Kashmir, Jharkhand, Punjab, Rajasthan and Uttar Pradesh. In accordance with the UDAY agreements, electricity suppliers and states must take steps to reduce technical and commercial losses due to the theft of electricity and the non-collection of invoiced units. These losses represent 35% of the total units delivered to Jharkhand and 32% to Uttar Pradesh. After much hesitation, Tamil Nadu signed up for the Ujwal Discom Insurance Yojana (UDAY), making it the 21st state to join this central system of turning around state-owned electricity companies in financial difficulty.