Rajasthan Govt all set to subscribe to the UDAY scheme

On the sidelines of the Resurgent Rajasthan Summit, in a chat with CNBC-TV18’s Rituparna Bhuyan, Rajasthan Chief Secretary C S Rajan said that the Rajasthan government is ready to subscribe to the Ujjawal Discom Assurance Yojana (UDAY).

Regarding the royalty issue with Cairn India in Rajasthan, Rajan said that the centre wants to hike revenue sharing to extend Production Sharing Contract (PSC) and is still in talks with with Cairn.Below is the transcript of CS Rajan’s interview with CNBC-TV18\\'s Rituparna Bhuyan.Q: When Rajasthan would be signing into the UDAY programme? A: (starts in the middle of an answer..) the package as you know requires the state government to take on 50 percent of the outstanding debt of the discoms in the very first year, that is by March 2016, a further 25 percent in financial year 2016-17. Now this take over we have already planned and we should be able to handle it in spite of the fact that the new pay commission report has just been announced which will put increasingly greater pressure on state finances. But the advantage of this takeover of loans is twofold. One, that it will substantially clean the balance sheet of the discoms, enable the discoms to start raising loans on their own balance sheets and second, it will bring about considerable reduction in the interest servicing burden of the state government. The interest reduction is likely to be order of more than three percent. So, we are in readiness for implementing the package that has been recently cleared by the union cabinet and a formal orders of which we are waiting. Q: Cairn India is a big player in Rajasthan. Has the issue regarding the royalty regarding Cairn, has that been sorted out, if you can just give us an update regarding that? A: The offer that the central government has made is that it would be willing to extend the production-sharing contract (PSC) subject to Cairn agreeing to increase the revenue share of the central government and the logic of the central government is that now that it has become less risky investment than the first time around when oil had not been struck now that large reserves of oil are available and they are known. So, the risk factor is much lower and therefore the investments will likely to be also of a lower order therefore it is going to be a more profitable venture for Cairn. Therefore Cairn should rightly share a larger portion of revenue with the central government. That is under consideration by Cairn Energy.