New Delhi: The Haryana government will issue Uday bonds to raise about ₹ 25,950 crore for retiring the accumulated debt of its power utilities Uttar Haryana Bijli Vitran Nigam Ltd and Dakshin Haryana Bijli Vitran Nigam Ltd. The State on Friday signed a debt takeover deal with the companies and the Union power ministry.
Haryana chief minister Manohar Lal Khattar and power minister Piyush Goyal were present on the occasion. Haryana is the seventh state to take over the debt of state power utilities under the Ujwal Discom Assurance Yojana (Uday) announced by the central government on 5 November last year.
Gujarat, the power utility that is financially healthy, too, joined the scheme to take advantage of other benefits like priority central funding for certain other schemes. The central government encourages states to adopt the Uday scheme with extra incentives like low-cost power from NTPC Ltd and other utilities and priority in central funding in certain schemes.
The combined debt of power distribution companies that are being restructured exceed ₹ 1.8 trillion, accounting for about 45% of the total outstanding power utility debt in the country of ₹ 4.3 trillion as of 30 September 2015.
Under the debt recast scheme, states are taking over 75% of the outstanding debt of distributors. Uday bonds will have a five-year moratorium on repayment and only the interest payments would be included in the calculation of states’ fiscal deficit, which is capped at 3% of the state gross domestic product (GDP).
However, from 2018-19, if distribution companies incur further losses, their debt will not be treated separately from that of the state, as per the Uday scheme. The idea is to prompt states to ensure that their utilities become efficient in billing and curtailing power theft, making them financially viable.