What is plan b for the uday scheme, if it fails to resolve the electricity discom mess_ – the economic times

In the first part of this column published last week, I had reviewed warning signals in the banking and financial sectors. Electricity tattoo designs Here I write about the power sector.

In November last year, the Union cabinet approved an imaginative UDAY scheme (Ujwal DISCOM Assurance Yojana) to resolve the electricity discom mess. Electricity flow diagram It has an operational improvement part, and a financial engineering part. Gas apple pay All citizens must accept UDAY as a scheme worth a try, and they must pray to the Lord that sense will prevail among elected state governments. Gas nozzle icon I have no quarrel with the UDAY scheme in this respect of pushing state discoms to improve operational efficiency.

The crisis in the power sector is the product of years of muddling and obfuscating by successive governments, both at the state and the Centre. Chapter 7 electricity and magnetism To cut through the muddle, an important sine qua non is that the Centre has to find a way to work collaboratively with states — as is true for agriculture, GST and many other next-generation reforms. Electricity grounding works The fractious politics of state-Centre relations is not helpful in focused and speedy correction of the electricity situation. Gas national average 2009 The absence of collaboration with the states is a definite risk factor.

The accounts of the three PPP electricity distribution companies (discoms) in Delhi reveal “regulatory assets” of a staggering Rs 20,000 crore as of March-end 2016. Gas in oil car This means 10 million electricity users in Delhi owe the discoms Rs 20,000 per capita! The Delhi electricity consumers are unlikely to be even aware of their debt, or that they are paying interest on that debt. Gas relief for babies home remedy In the case of the Delhi discoms, the regulator has assured that the debt will be paid by consumers. Electricity kwh cost On that basis, auditors have certified the accounts because anyway there is no way to confirm that the 10 million consumers will pay. T gasthuys This situation has arisen because of the nexus between the Delhi government and regulator, who failed to award cost-reflective tariffs.

The same picture exists in several states. Electricity lessons ks1 Besides the staggering losses, the “regulatory assets” in all discoms in the country is over Rs 75,000 crore.

What is this electricity mess and how did we get there? The discoms are, for the large part, companies under the Companies Act. Electricity facts history They are supposed to be governed and to behave like any private sector company (in fact, they should behave in an exemplary manner to set an example to private sector). Origin electricity faults For many decades, state governments gave away electricity freebies to secure political patronage, discoms obediently picked up the bill on their balance sheet, and banks subserviently financed the discoms. Power energy definition As of March 2015, the aggregated accumulated losses of discoms are, hold your breath, Rs 3.8 lakh crore and their outstanding debt is Rs 4.3 lakh crore, approximately $65 billion! This is apart from the “regulatory assets” of another Rs 75,000 crores, approximately $11 billion!

Who is responsible and accountable for this mess? The centre says it is the states, politicians blame industrialists, and they all blame bureaucrats. Gas variables pogil packet answers Attempts were made at least twice in the last 15 years to devise a remedial scheme; the schemes devised were as good as schemes go, but the state governments were busy doing what Milton Friedman deris ively termed as “spending other people’s money on other people”. Natural gas in spanish The discom finances got worse because states were undisciplined.

It is also important to note that the politics of the Centrestate relationship becomes very important. Electricity notes pdf UDAY assumes that states will behave better by improving their operations. Gas and supply okc West Bengal and Tamil Nadu have not yet signed up for UDAY. Electricity prices going up As I write, sitting in Tamil Nadu, I face unscheduled power cuts four times a day, while the state government has declared that it has surplus power to export to other states! Further, right after the recent elections, the chief minister of Tamil Nadu did the opposite of what UDAY demands — she decided to give free electricity to certain sections (and also waiver of farm loans by cooperative banks).

The official presentation makes no mention whatsoever of the consequences if states fail to meet targets. Gas house edwards co What is Plan B for UDAY, if states don’t deliver as their track record indicates? What are its financial implications since both state and Central deficits will be affected? Are we postponing facing the reality?

It is also a concern as to how the accounting is proposed to be done in UDAY, requiring these loans to be tucked away in the state’s finances, hidden without actually hiding them; they are behind the curtain, and if you know how to part the curtain, they are visible.

Would it have been better to account for things as they are? If the facts show up in visible ratios like state/Centre fiscal deficit, all concerned might behave more responsibly. Electricity grid australia There is also an element of ever-greening the loans by passing the hat from PSBs to PSUs to give the optical effect of there being no NPA.

Imagine if a corporate group came up with such a bond scheme — let us call it CUSY standing for company udhaar sadabahaar yojana. O gastronomico In essence, the beleaguered company’s parent would issue bonds that are supposed to be bought back by the banks which have given the loans. Gas vs diesel engine Technically, the answer would be “yes” if the parent company had a solid balance sheet! But does it not stretch credibility?

Much of the financial engineering of UDAY is possible because of the national balance sheet, but is it a bit stretched? The government has a difficult problem to solve, and they are surely trying their best. Electricity joules However, the prodromal or warning signals of politics stretching the boundaries of economics and financial planning are deeply worrisome.

The issue may also be one of credibility of government, whether UPA 2 or NDA. La gastronomie Columnist Pratap Bhanu Mehta has said that “the dominant government culture is to spin, so that even truths begin to get doubted”. Gas mask bong nfl While governments do have to showcase their achievements, beyond a level, the spin is so intense that the credibility of the government gets eroded. Gas dryer vs electric dryer cost savings Hopefully, we are not at that point with this government.