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Financial & operational opportunities for disco ms under uday

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What erstwhile was ignored, has now gained pinnacle importance by Government as the future of power sector at large depends upon better financial health and consistent operations of DISCOMS. To ensure this objective Government did attempted FRPs for struggling Discoms in 2013 which tanked due to lack of timely implementation, forcing yet another scheme to turnaround the fate of state owned distribution utilities which has earned the nomenclature as UDAY (Ujwal DISCOM Assurance Yojana). The scheme is touted as the next paladin to bail out the struggling Discoms, potentially could see them turn green in a time horizon of 3-4 years from 2015/16.

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Financial & operational opportunities for disco ms under uday

  1. 1. Financial & Operational Opportunity Track for Discoms in India Under UDAY March 2016 Opportunity Track Market Report Series- EREP
  2. 2. “Power Distribution” the weakest link of Indian Power value chain has consistently threatened the procurement dynamics. Research Base Approximate savings per annum in the cost of interest $ 8 Billion The long standing “Achilles” heel of Indian power sector has arguably been the power distribution facet courtesy the poor operational efficiencies and piling debt mount on respective Discoms. The weakest link of the power value chain has consistently pressurized India’s power industry and has threatened procurement dynamics putting a serious question mark over existing and upcoming power generation portfolio of the country. join the Future now Financial & Operational Opportunity Track for Discoms in India Under UDAY| 1 Copyright© 2016 ENINCON, All rights reserved 0 5 10 15 20 Savings(InUSDBillion) Overall Savings in Cost 14.6 UDAY touted as the next paladin to bail out the struggling Discoms, potentially could see them turn green in a time horizon of 3-4 years from 2015/16. Though optional for the states the objectives of the scheme are pretty direct and convincing provided they find timely application as well, which are depicted as below: To ensure this objective Government did attempted FRPs for struggling Discoms in 2013 which tanked due to lack of timely implementation, forcing yet another scheme to turnaround the fate of state owned distribution utilities which has earned the nomenclature as UDAY (Ujwal DISCOM Assurance Yojana). Exhibit 01: Principal Objectives of UDAY Scheme of GoI for State Owned Discoms & Key Numbers ILLUSTRATIVE Reduction in Cost of Interest of Discoms through debt takeover by States Dramatically Improving Operational Efficiency of Discoms Reducing the Cost of Power Procurement Enforcing Financial Discipline on Discoms 1 2 3 4 What erstwhile was ignored, has now gained pinnacle importance by Government as the future of power sector at large depends upon better financial health and consistent operations of DISCOMS. INR.880 Billion INR. 460 Billion G A I N INR.160 Billion INR.160 Billion Relief per annum for Discoms Savings in Cost of Interest Decrease in Cost of Supply Savings through Improved Coal Supplies Source: enincon perspective
  3. 3. Fifteen States in India have opted for UDAY scheme so far “Ujwal DISCOM Assurance Yojana” is regarded as one stop medicine to all woes of the power distribution companies in India Research Case join the Future now Financial & Operational Opportunity Track for Discoms in India under UDAY| 2 Copyright© 2016 ENINCON, All rights reserved Exhibit 02: UDAY Scheme for Discoms – An Infographic View (For Volunteer Discoms) INFOGRAPHIC 0% 20% 40% 60% Andhra… Bihar Jharkhand Madhya… Rajasthan TamilNadu UttarPradesh Telangana AT&CLoss Levels 2014-15 (Actuals) 2018-19 (Projected) 30% 53% 17% 0.7 Discoms IPPs Non-Stressed Stressed States of Andhra Pradesh, Rajasthan and Telangana plan to reduce AT&C loss levels below 15% by 2018-19 60-70% Exposure of Debts for Public Sector Banks in Percentage – Discoms have 30% share Of INR. 4 Trillion of estimated staggering losses, close to 2/3rd of contribution comes from 8 states opted for UDAY Tamil Nadu, Rajasthan, Uttar Pradesh and Haryana to have best savings in the range of INR.1 -1.80 for cost of supply. Rest of the states would have a benefit of 80p/unit Cost of Supply Savings Variance L H States planned for less than 15% AT&C loss levels by 2018-19 States opted for UDAY scheme Legend Source: enincon perspective INR 2.5 Trillion Piled up losses shall be wiped off by FY’2018-19 through UDAY
  4. 4. 75% of the Discoms debt taken over by the respective states in a phased manner of 50% in FY’2015-16 and remaining 25% in FY’2016-17 Research Case Potential Savings on cost of supply for all states INR 0.75-0.85 / Unit Per Unit Savings of the Key States (In INR/ Unit) Haryana Uttar Pradesh Rajasthan Predicting a changing market with greater degree of accuracy demands thorough details and a trend to identify with. Ironically what UDAY offers on stage for State’s which opted for the scheme has neither to comply with. However, there will be certain implications on the state’s financial health courtesy the taking over debt of Discoms by state of upto 75% by 2016-17 in a phased manner of 50% in 2015-16 and another 25% in the following fiscal. join the Future now Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India Under UDAY| 3 Tamil Nadu INR 1-1.80/Unit Best Saving Range Key Uncertainties that will alter the long-term future post UDAY………  Increase in fiscal deficit  Less pressure on liquidity and cost of market borrowings to be consistent with state’s credit profile  DDUGYJ, PSDF and IPDS – Will these schemes reduce the burden on states‘ finance ? This would be done through issue of non SLR SDLs (State Development Loans) directly linked to market or to existing lenders holding the debts of Discoms to appropriate extent. Hence, to estimate a ball park in terms of the risks for the State’s to be negated an identification of main uncertainties becomes quintessential in order to develop signposts to effect robust decision making process. Though, tacky but UDAY might prove to be wild card for states to overcome the political embargoes and improve both the power situation and tariff conundrum in one go. However, challenges are umpteen which would shape even big with years to come and only efficient dealing of them would ensure UDAY as a fit for state’s else the financial condition would witness a sunset and delve so deep in darkness that restructuring will be difficult. In order to address the much-felt need for the power distribution industry in India and to understand will UDAY be able to heel the financial dent which the Indian DISCOMs are facing as of now , enincon llp is coming up with a report tracking the financial and operational opportunity for Discoms in India under the UDAY scheme.
  5. 5. Research Case join the Future now ENINCON Research & Services Framework Research Reports ENINCON Research Desk Business Stakeholders/Partici pants Experts Insights/ Market view Validated data & analysis Opportunity mapping & Market sizing First hand sector knowledge & inputs Gist of the report in .pdf format for ready use Free Author support on report & Competitive cost Customized Research Solution Primary research inputs from F2F interviews ENINCON’S Research Difference Germinates from minds that think fresh to evolve path finding guide for all stake holders through quality information & analysis Emanates from seamless integration of domain expertise with first hand industry knowledge and customized research solutions at a very competitive cost ENINCON’S Service Difference Copyright© 2016 ENINCON, All rights reserved ENINCON Research reports delivering domain knowledge, market insights & future outlook Financial & Operational Opportunity Track for Discoms in India under UDAY| 4
  6. 6. join the Future now ENINCON Research Objective & Results Financial & Operational Opportunity Track for Discoms in India Under UDAY examines the state wise operational and financial opportunities for the power distribution companies in India. The report evaluates how UDAY can prove to be a one stop solution for cutting down the debt burden of Discoms in India along with improving the power situation and tariff conundrum in one go.ResearchObjective ResearchResults 1. Examining the power distribution scenario in India 2. Developing an understanding about UDAY 3. Evaluating how UDAY can be a role reversal for Indian Discoms 4. Evaluating the opportunities associated with UDAY for improving the operational and financial crunch of power distribution companies in India 1. Evaluating the success and failures of financial restructuring programme 2. State wise operational opportunity track for DISCOMs under UDAY 3. State wise financial opportunity track for DISCOMs under UDAY 4. Identifying best states to get benefitted most under UDAY Copyright© 2016 ENINCON, All rights reserved Market series report- Opportunity Track for Discoms under UDAY- Churning out the financial & operational opportunity for the Indian power distribution companies Financial & Operational Opportunity Track for Discoms in India Under UDAY| 5
  7. 7. Copyright© 2016 ENINCON, All rights reserved ENINCON Research reports evolve a path finding guide for all stakeholders through quality information and analysis Key Queries Resolved • What is the power distribution scenario in India? Must buy for  Power Distribution Companies  State Electricity Boards  Ministry of Power  State Government  Electrical Equipment Providers  Banks  Other Financial/ Lending Institutes  Transmission Service Providers  O&M Service Providers  Research Firms  Research Bodies/ Institutes  Industry Associations  Consultants Identifying eccentric opportunities Opportunities for PSUs and the savings for DISCOMs Opportunities for equipment manufacturers Opportunities for equipment manufacturers Power Distribution in India Financial Opportunity Operational Opportunity • What are the operational opportunities hidden for power distribution companies in India under UDAY? • What would be the opportunities for Discoms in metering , billing , power, trading , feeder segregation and many more etc? • What are the key financial opportunity parameters for the power distribution companies in India under UDAY? • What could be new means of revenue generation for Discoms? • How would they reduce the fiscal deficit and increase the liquidity? • How UDAY scheme can change the current picture of power distribution in India? And what are the opportunities for Discoms? join the Future now Financial & Operational Opportunity Track for Discoms in India under UDAY| 6 UDAY Scheme
  8. 8. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5 1. Executive Summary 2. Power Distribution in India and the UDAY Scheme 2.1 Issues with Power Distribution in India 2.2 Financial Restructuring Programme - Evaluating Success & Failures 2.3 UDAY- Scheme Overview 3. Operational Opportunity for Discoms in Uttar Pradesh 3.1 Substation 3.2 Metering 3.3 Billing 3.4 Transformers 3.5 Equipments 3.6 Capacity Expansion 3.7 Feeder Segregation 3.8 Distribution Lines 3.9 Franchise / Private 3.10 Power Sale 3.11 Open Access 3.12 Cabling 3.13 Energy Efficiency Practices 3.14 Operation & Maintenance 4. Financial Opportunity for Discoms in Uttar Pradesh 4.1 New Source of Revenue Generation 4.2 Decrease in Fiscal Deficit 4.3 Increase in Liquidity 4.4 Ease in Availability of Loans 4.5 Revised Tariff Structure as per Universal Currency 4.6 Application of DDUGY & Integrated Power Development Scheme Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 7 5. Operational Opportunity for Discoms in Uttrakhand 5.1 Substation 5.2 Metering 5.3 Billing 5.4 Transformers 5.5 Equipments 5.6 Capacity Expansion 5.7 Feeder Segregation 5.8 Distribution Lines 5.9 Franchise/ Private 5.10 Power Sale 5.11Open Access 5.12 Cabling 5.13 Energy Efficiency Practices 5.14 Operation & Maintenance 6. Financial Opportunity for Discoms in Uttrakhand 6.1 New Source of Revenue Generation 6.2 Decrease in Fiscal Deficit 6.3 Increase in Liquidity 6.4 Ease in Availability of Loans 6.5 Revised Tariff Structure as per Universal Currency 6.6 Application of DDUGY & Integrated Power Development Scheme 7. Operational Opportunity for Discoms in Jammu & Kashmir 7.1 Substation 7.2 Metering 7.3 Billing 7.4 Transformers 7.5 Equipments 7.6 Capacity Expansion
  9. 9. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 8 7.7 Feeder Segregation 7.8 Distribution Lines 7.9 Franchise/ Private 7.10 Power Sale 7.11Open Access 7.12 Cabling 7.13 Energy Efficiency Practices 7.14 Operation & Maintenance 8. Financial Opportunity for Discoms in Jammu & Kashmir 8.1 New Source of Revenue Generation 8.2 Decrease in Fiscal Deficit 8.3 Increase in Liquidity 8.4 Ease in Availability of Loans 8.5 Revised Tariff Structure as per Universal Currency 8.6 Application of DDUGY & Integrated Power Development Scheme 9. Operational Opportunity for Discoms in Himachal Pradesh 9.1 Substation 9.2 Metering 9.3 Billing 9.4 Transformers 9.5 Equipments 9.6 Capacity Expansion 9.7 Feeder Segregation 9.8 Distribution Lines 9.9 Franchise / Private 9.10 Power Sale 9.11 Open Access 9.12 Cabling 9.13 Energy Efficiency Practices 9.14 Operation & Maintenance 10. Financial Opportunity for Discoms in Himachal Pradesh 10.1 New Source of Revenue Generation 10.2 Decrease in Fiscal Deficit 10.3 Increase in Liquidity 10.4 Ease in Availability of Loans 10.5 Revised Tariff Structure as per Universal Currency 10.6 Application of DDUGY & Integrated Power Development Scheme 11. Operational Opportunity for Discoms in Haryana 11.1 Substation 11.2 Metering 11.3 Billing 11.4 Transformers 11.5 Equipments 11.6 Capacity Expansion 11.7 Feeder Segregation 11.8 Distribution Lines 11.9 Franchise / Private 11.10 Power Sale 11.11 Open Access 11.12 Cabling 11.13 Energy Efficiency Practices 11.14 Operation & Maintenance 12. Financial Opportunity for Discoms in Haryana 12.1 New Source of Revenue Generation 12.2 Decrease in Fiscal Deficit 12.3 Increase in Liquidity 12.4 Ease in Availability of Loans 12.5 Revised Tariff Structure as per Universal Currency 12.6 Application of DDUGY & Integrated Power Development Scheme
  10. 10. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 9 13. Operational Opportunity for Discoms in Rajasthan 13.1 Substation 13.2 Metering 13.3 Billing 13.4 Transformers 13.5 Equipments 13.6 Capacity Expansion 13.7 Feeder Segregation 13.8 Distribution Lines 13.9 Franchise / Private 13.10 Power Sale 13.11 Open Access 13.12 Cabling 13.13 Energy Efficiency Practices 13.14 Operation & Maintenance 14. Financial Opportunity for Discoms in Rajasthan 14.1 New Source of Revenue Generation 14.2 Decrease in Fiscal Deficit 14.3 Increase in Liquidity 14.4 Ease in Availability of Loans 14.5 Revised Tariff Structure as per Universal Currency 14.6 Application of DDUGY & Integrated Power Development Scheme 15. Operational Opportunity for Discoms in Punjab 15.1 Substation 15.2 Metering 15.3 Billing 15.4 Transformers 15.5 Equipments 15.6 Capacity Expansion 15.7 Feeder Segregation 15.8 Distribution Lines 15.9 Franchise / Private 15.10 Power Sale 15.11 Open Access 15.12 Cabling 15.13 Energy Efficiency Practices 15.14 Operation & Maintenance 16. Financial Opportunity for Discoms in Punjab 16.1 New Source of Revenue Generation 16.2 Decrease in Fiscal Deficit 16.3 Increase in Liquidity 16.4 Ease in Availability of Loans 16.5 Revised Tariff Structure as per Universal Currency 16.6 Application of DDUGY & Integrated Power Development Scheme 17. Operational Opportunity for Discoms in Maharashtra 17.1 Substation 17.2 Metering 17.3 Billing 17.4 Transformers 17.5 Equipments 17.6 Capacity Expansion 17.7 Feeder Segregation 17.8 Distribution Lines 17.9 Franchise / Private 17.10 Power Sale
  11. 11. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 10 17.11 Open Access 17.12 Cabling 17.13 Energy Efficiency Practices 17.14 Operation & Maintenance 18. Financial Opportunity for Discoms in Maharashtra 18.1 New Source of Revenue Generation 18.2 Decrease in Fiscal Deficit 18.3 Increase in Liquidity 18.4 Ease in Availability of Loans 18.5 Revised Tariff Structure as per Universal Currency 18.6 Application of DDUGY & Integrated Power Development Scheme 19. Operational Opportunity for Discoms in Madhya Pradesh 19.1 Substation 19.2 Metering 19.3 Billing 19.4 Transformers 19.5 Equipments 19.6 Capacity Expansion 19.7 Feeder Segregation 19.8 Distribution Lines 19.9 Franchise / Private 19.10 Power Sale 19.11 Open Access 19.12 Cabling 19.13 Energy Efficiency Practices 19.14 Operation & Maintenance 20. Financial Opportunity for Discoms in Madhya Pradesh 20.1 New Source of Revenue Generation 20.2 Decrease in Fiscal Deficit 20.3 Increase in Liquidity 20.4 Ease in Availability of Loans 20.5 Revised Tariff Structure as per Universal Currency 20.6 Application of DDUGY & Integrated Power Development Scheme 21. Operational Opportunity for Discoms in Gujarat 21.1 Substation 21.2 Metering 21.3 Billing 21.4 Transformers 21.5 Equipments 21.6 Capacity Expansion 21.7 Feeder Segregation 21.8 Distribution Lines 21.9 Franchise / Private 21.10 Power Sale 21.11 Open Access 21.12 Cabling 21.13 Energy Efficiency Practices 22.14 Operation & Maintenance 22. Financial Opportunity for Discoms in Gujarat 22.1 New Source of Revenue Generation 22.2 Decrease in Fiscal Deficit 22.3 Increase in Liquidity 22.4 Ease in Availability of Loans 22.5 Revised Tariff Structure as per Universal Currency 22.6 Application of DDUGY & Integrated Power Development Scheme
  12. 12. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 11 25.7 Feeder Segregation 25.8 Distribution Lines 25.9 Franchise / Private 25.10 Power Sale 25.11 Open Access 25.12 Cabling 25.13 Energy Efficiency Practices 25.14 Operation & Maintenance 26. Financial Opportunity for Discoms in Chhattisgarh 26.1 New Source of Revenue Generation 26.2 Decrease in Fiscal Deficit 26.3 Increase in Liquidity 26.4 Ease in Availability of Loans 26.5 Revised Tariff Structure as per Universal Currency 26.6 Application of DDUGY & Integrated Power Development Scheme 27. Operational Opportunity for Discoms in Bihar 27.1 Substation 27.2 Metering 27.3 Billing 27.4 Transformers 27.5 Equipments 27.6 Capacity Expansion 27.7 Feeder Segregation 27.8 Distribution Lines 27.9 Franchise / Private 27.10 Power Sale 27.11 Open Access 27.12 Cabling 27.13 Energy Efficiency Practices 27.14 Operation & Maintenance 23. Operational Opportunity for Discoms in Andhra Pradesh 23.1 Substation 23.2 Metering 23.3 Billing 23.4 Transformers 23.5 Equipments 23.6 Capacity Expansion 23.7 Feeder Segregation 23.8 Distribution Lines 23.9 Franchise / Private 23.10 Power Sale 23.11 Open Access 23.12 Cabling 23.13 Energy Efficiency Practices 23.14 Operation & Maintenance 24. Financial Opportunity for Discoms in Andhra Pradesh 24.1 New Source of Revenue Generation 24.2 Decrease in Fiscal Deficit 24.3 Increase in Liquidity 24.4 Ease in Availability of Loans 24.5 Revised Tariff Structure as per Universal Currency 24.6 Application of DDUGY & Integrated Power Development Scheme 25. Operational Opportunity for Discoms in Chhattisgarh 25.1 Substation 25.2 Metering 25.3 Billing 25.4 Transformers 25.5 Equipments 25.6 Capacity Expansion
  13. 13. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 12 28. Financial Opportunity for Discoms in Bihar 28.1 New Source of Revenue Generation 28.2 Decrease in Fiscal Deficit 28.3 Increase in Liquidity 28.4 Ease in Availability of Loans 28.5 Revised Tariff Structure as per Universal Currency 28.6 Application of DDUGY & Integrated Power Development Scheme 29. Operational Opportunity for Discoms in Odisha 29.1 Substation 29.2 Metering 29.3 Billing 29.4 Transformers 29.5 Equipments 29.6 Capacity Expansion 29.7 Feeder Segregation 29.8 Distribution Lines 29.9 Franchise / Private 29.10 Power Sale 29.11 Open Access 29.12 Cabling 29.13 Energy Efficiency Practices 29.14 Operation & Maintenance 30. Financial Opportunity for Discoms in Odisha 30.1 New Source of Revenue Generation 30.2 Decrease in Fiscal Deficit 30.3 Increase in Liquidity 30.4 Ease in Availability of Loans 30.5 Revised Tariff Structure as per Universal Currency 30.6 Application of DDUGY & Integrated Power Development Scheme 31. Operational Opportunity for Discoms in Karnataka 31.1 Substation 31.2 Metering 31.3 Billing 31.4 Transformers 31.5 Equipments 31.6 Capacity Expansion 31.7 Feeder Segregation 31.8 Distribution Lines 31.9 Franchise / Private 31.10 Power Sale 31.11 Open Access 31.12 Cabling 31.13 Energy Efficiency Practices 31.14 Operation & Maintenance 32. Financial Opportunity for Discoms in Karnataka 32.1 New Source of Revenue Generation 32.2 Decrease in Fiscal Deficit 32.3 Increase in Liquidity 32.4 Ease in Availability of Loans 32.5 Revised Tariff Structure as per Universal Currency 32.6 Application of DDUGY & Integrated Power Development Scheme 33. Operational Opportunity for Discoms in Kerala 33.1 Substation 33.2 Metering 33.3 Billing 33.4 Transformers 33.5 Equipments 33.6 Capacity Expansion
  14. 14. join the Future now Defence Manufacturing in India- Unleashing $ 40 Billion Opportunity| 5Contents & Coverage Copyright© 2016 ENINCON, All rights reserved Financial & Operational Opportunity Track for Discoms in India under UDAY| 13 33.7 Feeder Segregation 33.8 Distribution Lines 33.9 Franchise / Private 33.10 Power Sale 33.11 Open Access 33.12 Cabling 33.13 Energy Efficiency Practices 33.14 Operation & Maintenance 34. Financial Opportunity for Discoms in Kerala 34.1 New Source of Revenue Generation 34.2 Decrease in Fiscal Deficit 34.3 Increase in Liquidity 34.4 Ease in Availability of Loans 34.5 Revised Tariff Structure as per Universal Currency 34.6 Application of DDUGY & Integrated Power Development Scheme

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