UDAY has started to yield results, but it needs to step up work in slow progressing states.
What is the status of UDAY?
The central purpose of UDAY is to improve the financial health of state-owned power distribution companies.
This goal is supposed to be achieved by improving operational performance, reducing the aggregate transmission and commercial (AT&C) losses, and bridging the gap between the average cost of supply (ACS) and average revenue realisation (ARR) of discoms.
The AT&C losses and interest cost have all started decreasing, resulting in a 40 per cent reduction in the revenue-cost gap.
The average AT&C losses have come down to 20 per cent in 2017 from 23 per cent in 2014.
That states have a lot of ground to cover to meet the 15 per cent target by 2019.
What is status of poor performing states?
There are still eight states, including Chhattisgarh, Bihar, Uttar Pradesh, Rajasthan, Haryana, and Jammu & Kashmir, where the situation has not shown much improvement.
In fact, the AT&C losses have actually grown after these states joined the debt-restructuring scheme.
Besides the AT&C losses, even the difference between the power procurement cost and the selling price has gone up.
In states such as Uttar Pradesh, Rajasthan, Punjab, Haryana, Jharkhand, and Tamil Nadu this gap between the ACS and ARR ranges from 0.26 to 2.55.
Despite this slippage, the average ACS-ARR gap was reduced to 0.46 in 2017 from 0.76 three years ago.
Unless these laggard states show a sustainable improvement in the financials of their discoms, UDAY may find it difficult to achieve its final goal at the national level.
