Jharkhand has formally entered into an agreement with the Centre for improving financial and operational efficiencies of its power distribution company (DISCOMs). The agreement has come out under UDAY Scheme (Ujwal Discom Assurance Yojana) and is expected to benefit the State to the tune of `5,300 crore in the form of debt reduction and interest cost.

The MoU in this regard was signed on Tuesday in New Delhi in the presence of Chief Minister Raghubar Das. Speaking briefly on the occasion, the Chief Minister lauded the scheme in the direction of strengthening the Centre-State relations. “I believe UDAY Scheme and others like that would work in strengthening the federal structure of the country even further. It would improve the coordinated effort in which the Centre and States need to work as team,” said Das.

The State Cabinet had only about a month ago okayed the proposal to become a signatory of UDAY Scheme and eventually Jharkhand went on becoming the first State of the country to sign the pact in this regard. The scheme envisages reducing interest burden, cost of power and AT&C losses of the power companies.

Power distribution company Jharkhand Bijli Vitaran Nigam Limited’s outstanding debt to central public sector firms Coal India and Damodar Valley Corporation would be repaid by the State Government and is expected to save `115 crore on interest cost and reduction in debt. Consequently, DISCOM would become sustainable to supply adequate and reliable power enabling 24x7 power supply. The scheme provides that the States would take over 75 per cent debt of Discoms.