Why UDAY discom restructuring initiative will work: Goyal

In an interview with CNBC-TV18, Power Minister Piyush Goyal discussed the impact of the UDAY initiative that the central government unveiled today that will take the debt off struggling discoms books and transfer them to states' balance sheets.Below is the transcript of Piyush Goyal’s interview with Anshu Sharma on CNBC-TV18.Q: Will states come on board financial restructuring package announced by you?A: Take the case of Rajasthan. Vasundhara Raje left behind a very strong power sector in 2008. 2008-2013, distribution companies in the state complete went out of control, berserk with added Rs 50,000-55,000 losses. And in 2013, the people voted her back based on the poor performance of the earlier government and they were 163 seats in the 100-200 seat legislature. But, now she has inherited this huge problem. So, the states have themselves suggested a stop to any ability of any government to play with the people’s wealth.Q: What is the timeline for the tripartite agreement with the states and how many states?A: This is an optional scheme. All states are welcome to join in. I would urge all states to look at it in the holistic fashion and see the great benefits that the central government is providing to the states and I am quite confident in the coming months, all the states will agree with us and come on board.Q: How effective with the reform package be?A: It is a historic day for the power sector with the approval of UDAY - Ujwal Discom Assurance Yojana by the union cabinet under the leadership of Prime Minister Narendra Modi. We are seeing a clear roadmap to sort the problems of discoms out between the next 2 and three years. Most of the states will become in profits within the next two years. Two or three states may take one year or two years more. We are very confident that this UDAY Yojana which ensures a resolution of current crisis, which draws up a roadmap over the next two or three years, which will help to bring down the losses of the discoms to zero and provide a hard budget constrain to ensure these discoms never have the ability to park their losses outside the states balance sheet will in a wholistic manner address this problem for posterity.Q: How will the bonds work for the states? In the past also we have seen a financial restructuring plan but it never worked for the discoms turnaround?A: In the past none of the schemes had provided a hard budget constraint. This is the first for this scheme. UDAY also involves an agreement between the states, the discoms and the ministry of power central government where obligations and commitments of the states, the discoms and the central government are well laid out in consultation and with the agreement of the states. It is a bottom up approach, not a top down approach. The states will be assisted and hand holded to bring down the cost of power by improvements in their distribution and sub transmission network, reducing the cost of power through coal rationalisation, helping energy efficiency in the states and finally bringing down the interest cost substantially. All of these measures we believe will reduce their losses to zero and with the constraints on further bank lending and the compulsion to address the issue of losses through state budgets in the future. We are very confident that together the states and centre we will ensure that in the future no state discom is allowed to slide the way it has in the past.