State to switch on UDAY on January 9, to save 11,000 crore

Besides inking a memorandum of understanding by Tamil Nadu and its discom TANGEDCO with Power Ministry on Monday, it will pave the way for covering almost 90 per cent of total utilities’ debt of around Rs 4 lakh crore. 

“Tamil Nadu would derive an overall net benefit of over Rs 11,000 crore through UDAY, by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc,” an official said. The official further said that almost 90 per cent of the Rs 4 lakh crore discom’s debt would be covered after Tamil Nadu joins the scheme. 

By signing the MoU under UDAY, the state will take over 75 per cent of Rs 30,420 crore debt of TANGEDCO. The scheme also provides for the balance debt to be re-priced or issued as state guaranteed discom bonds, at coupon rates around 3-4 per cent less than the average existing interest rate. UDAY lays stress on improving operational efficiencies of DISCOMs. 

Under the agreement, Tamil Nadu and TANGEDCO will bring about operational efficiencyby reducing losses and increased power supplies in areas with reduced AT&C losses.