The Andhra Pradesh government is exploring modalities to take over the loans of power distribution companies amounting to Rs. 8,892.47 crore under the Ujwal Discom Assurance Yojana (UDAY), a scheme launched by the Union government for the financial turnaround of discoms across the country.
The State Cabinet recently approved the revised proposal submitted by the Energy Department on taking over the liabilities of the APEPDCL and the APSPDCL and the proposal is now under the consideration of the Finance Department.
Sources say that given the financial position of the State and funds required for various flagship programmes and projects, it will be difficult for the government to take over the entire debt of discoms.
Within the available resources, the Finance Department will have to judiciously allot the funds for various sectors.
UDAY scheme
“We are working out how best to help the discoms and to what extent. There is also an indication that the UDAY scheme may be extended beyond 2016-17,” they said.
The Finance Department representatives held a meeting with Reserve Bank of India officials, it is learnt, on implementing the UDAY scheme without jeopardising the financial situation.
Under the scheme, the State government can take over 75 per cent of total outstanding loans of discoms as on September 30, 2015. Of this, 50 per cent of loans were to be taken over in 2015-16 and 25 per cent in 2016-17.
The total outstanding loans of the APEDCL and the APSPDCL are Rs. 14,720 crore and the A.P. government can take over Rs. 11,040 crore under the UDAY scheme.
But the State Cabinet in principle agreed to take over only Rs. 8,892.47 crore and AP Power Coordination Committee sent the proposal to the Rural Electrification Corporation and UDAY cell. It proposed to take over Rs. 6,346 crore working capital loans in 2016-17 and remaining Rs. 2,546 crore under FRP bonds.
No relaxation
However, the State was told that the UDAY scheme did not have a provision for debt takeover in 2017-18 and any takeover beyond 2016-17, would not be eligible for relaxation under the Fiscal Responsibility and Budget Management Act.
The Energy Department is pushing for takeover of debt at the earliest by at least taking over Rs. 5,700 crore and converting the remaining Rs. 3,100 crore as loan for this year and subsequently convert it into grant in 2017-18.
However, the Andhra Pradesh Finance Department is weighing the options with caution.
