Welcome to the new Energy Central — same great community, now with a smoother experience. To login, use your Energy Central email and reset your password.

Energy & Grid Management
Manoj Nirgudkar
Manoj Nirgudkar
 · Posted in Energy & Grid Management

All About Ujwal DISCOM Assurance Yojana (UDAY)

UDAY is a short form of Ujwal DISCOM Assurance Yojana.  First word and last word in it are in Hindi.  "A scheme for the bright future of state-owned electrical distribution companies in India" is a rough translation of UDAY. 
India consists of 28 states and 8 union territories.  The Prime Minister leads the central government.  Each state has a chief minister.  The federal structure ensures a division of powers between the central and state governments.
Each state has a state owned electrical distribution company.  DISCOM is a short form of distribution company.  
DISCOMs buy electricity from various sources and sell it to its customers.  DISCOMs bill the customers based on electricity usage and generate revenue. 
State owned DISCOMs are not efficient in revenue collection because of various reasons. State owned DISCOMs always show a revenue deficit. 
On 5th November, 2015 Ministry of Power, GoI launched UDAY.  UDAY documents and information are available here on the UDAY web site. 
The Central Government, State Government, and State DISCOM signed a tripartite Memorandum of Understanding (MoU) as part of UDAY.  About thirty-two MoUs are accessible to the public on the UDAY website.
Maharashtra is one of the states of India.  You can access Maharashtra UDAY MoU here. 
MoU document is divided into two parts:

  • Main document talks about financial numbers 
  • Annexure A is about loss reduction targets

The Main document is written in such a way that you will not understand it even if you read it 10 times.  Here is an extract from Maharashtra DISCOM Annual Report that summaries UDAY.

The Scheme UDAY was launched by the Government of India on 20 November, 2015 to ensure a permanent and sustainable solution to the debt ridden Distribution utilities to achieve financial stability and growth. As per the Tripartite MOU, signed by Ministry of Power, Govt. of India, Govt. of Maharashtra (GoM) and MSEDCL (Maharashtra DISCOM) on 07/10/2016, GoM shall take over Medium Term and Short Term debt of ₹ 4,95,975 Lakhs (Being 75% of ₹ 6,61,300 Lakhs, the debt of MSEDCL as on 30th September 2015. The debt is taken over by GoM and shall be transferred to MSEDCL as Grant/loan The grant received from GoM under UDAY scheme is treated as Revenue Grant for accounting purpose.

The questions that I have about UDAY are:

  1. How can GoM convert debt into a grant?
  2. From where did GoM get money to convert debt into a grant?
  3. Will GoM give similar treatment to private DISCOMs having debt?
  4. What is the purpose of using "difficult to understand English" in the MoU document?
  5. Who should decide the loss reduction targets --  Power Electrical Engineers or Chartered Accountants?

Happy to hear from you if you have answers to the above questions.