Sitharaman’s proposal to remove UDAY barriers is crucial as the debt of distribution companies is expected to surge at Rs 2.60 lakh cr by March 2020 from Rs 2.28 lakh cr in March 2019
Amidst falling plant load factor of power generating companies and burgeoning debt and losses of discoms, finance minister Nirmala Sitharaman has spelt out NDA government’s agenda for the growth in the power sector. Sitharaman has proposed the removal of barriers in the implementation of Ujwal DISCOM Assurance Yojana (UDAY) for financial turnaround and revival package for electricity distribution companies, review of cross-subsidy surcharge and other duties on power rates, a new package for power sector tariffs and promotion to open access and group captive power projects.
The finance minister also announced that the government will soon unveil a package for the power sector and go ahead with structural reforms to achieve the objective of ‘One Nation One Grid’ for affordable power to states.
Sitharaman’s proposal to remove UDAY barriers is crucial as the debt of distribution companies is expected to surge at Rs 2.60 lakh crore by March 2020 from Rs 2.28 lakh crore in March 2019.
Kameswara Rao, PwC partner (grid), said the government’s intent to reform cross-subsidies, introduce competition and structural reforms is positive news for the industry and investment but will affect state utilities. ‘’We could see the prudent states initiate early actions to follow the government’s direction,’’ he noted.
Rao asserted that the one-grid agenda is not new, but intensive investment in the resource-rich states is now urgent. ‘’This will allow the transfer of cheaper renewable energy to other states, and, equally, help exporting states manage the challenges of surplus. This is also critical to protect the private investments and avoid states forcing the renegotiation of power purchase agreements,’’ he opined.
Association of Power Producers director general Ashok Khurana hailed FM’s proposals on comprehensive new tariff policy including penalties on gratuitous load shedding, limiting loss factor for tariff formulation, package for stranded gas-based projects and restructured UDAY. ‘’We keenly await the grounding of these initiatives,’’ he viewed.
REMOVING THE BARRIER
- Sitharaman’s proposal to remove UDAY barriers is crucial as the debt of distribution companies is expected to surge at Rs 2.60 lakh crore by March 2020
- Under the earlier scheme, government had provided subsidy to stranded gas-based plants and those running at sub-optimal level
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