The document summarizes the Financial Restructuring Plan (FRP) of 2012 and Ujwal DISCOM Assurance Yojana (UDAY) scheme launched in 2015. FRP 2012 aimed to restructure discom debt but failed due to lack of clarity on bond interest rates and hidden discom losses. UDAY is aimed at improving the financial health of discoms by having states take over 75% of discom debt over two years, issuing bonds to replace debt, enforcing operational efficiency, and ensuring compliance with renewable purchase targets. Key objectives are reducing discom interest costs and power procurement costs while improving efficiency.

1. Ujjwal Goyal
NPTI-14th Batch
Date- 10/05/2016

2. Earlier Scheme

3. Financial Restructuring Plan (FRP) 2012 :-
Announced on-5th Oct, 2012
By Central (UPA) Government
Reason- For Achieving Financial turnaround by Restructuring discoms
debt with transitional Finance Mechanism
 Features- States to take over 50% of short term liabilities through
issuance of non-SLR bond and balance 50% need to be restructured by
the banks with a 3 year period duly guaranteed by state governments.

4. Failure of FRP-2012
• No clarity was there on the interest rate at which the
bonds will be issued by SEBs.
•Losses were hidden in “Other Current Assets” on which
there was no clarity with DISCOMs like Rajasthan, Uttar
Pradesh and Andra Pradesh(undivided).

5. Financial
Restructuring
Plan
Failure

6. UDAY : At a Glance
 UDAY is the integrated approach of the Ministry of Power (MoP),
Ministry of Coal (MoC) and Ministry of New & Renewable Energy
(MNRE).
 Ujwal DISCOM Assurance Yojana” is regarded as one stop medicine
to all woes of the power distribution companies in India
 Launched on 09th November 2015 and till now 15 out of 29 states has
adopted the scheme for strengthening the financial health of
DISCOMs.
 According to MoP, the overall losses of all the State Discoms are INR
4.3 Lakh Crores.

7. UDAY
Adopted
States
AP
Bihar
Haryana
Gujarat
MP
Chhattisgarh
Punjab
UP
HP
Jharkhand
Orissa
Maharashtra
Uttarakhand
J & K
Rajasthan

8. POWER SECTOR REFORMS
From 1956-1991
•Electricity Act 1948
•Industrial Policy
Resolution(1956)
•Generation & Distribution
of Power under State
Ownership
From 1991-2014
•Legislative and Policy
Initiatives(1991)
•Generation sector Private
•Establishing CERC and
SERCs (Regulatory Act-
1998)
•Electricity Act(2003)
•APDRP/ R-APDRP/
RGGVY
From 2014- Onwards
•Highest Power
generation and
Transmission capacity
addition
• Implementation of
IPDS and DDUGJY
•Biggest LED lighting
movement in the World
•Launch of UDAY
Dark Era
1956–1991
Pre-
liberalization
Era
1991-2014
Post-
liberalization
Era
2014 onwards
Accelerated
Growth
Trajectory
UDAY

9. Objectives of UDAY Scheme
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

10. Benefits of
UDAY
To
Government
• Achievement of 24X7 Power
for All
• Energy security through Coal
and Renewables
Industry &
Consumers
• Availability of 24X7 power
improving quality of life
and efficiency
• Lower cost of power
Banks &
Investors
• Lower risk for existing
investments and loans in
power, coal and renewables
sector
• Reduce investment uncertainty
across the sector
Benefits
of UDAY

11. 1. 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

12. 2. 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
3. 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.

13. 4. 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%.

14. 5. 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.
6. States accepting UDAY will be given additional funding through
DDUGJY, IPDS, Power Sector Development Fund (PSDF) or other such
schemes