Maharashtra Chief Minister Calls For Reintroduction Of UDAY Scheme And Energy Sector Reforms

Maharashtra Chief Minister Devendra Fadnavis on Thursday urged the Centre to reintroduce the UDAY scheme, lower interest rates on financing for the energy sector, remove levies, and allow state distributor Mahavitaran to issue interest-free bonds. He made these demands during a ministerial committee meeting at the Sahyadri Guest House here on the financial sustainability of power distribution companies, said a release by the Chief Minister’s Office.

“The energy sector requires financial support to improve efficiency and reduce costs. Mahavitaran being one of the largest power companies in the country should be allowed to issue interest-free bonds,” Fadnavis said.

UDAY scheme aims at improving the financial health of state-owned power distribution companies.

Union Minister of State for Energy Shripad Naik said the Centre is committed to increasing investment in the renewable energy sector, implementing battery storage solutions, using artificial intelligence and modern technology in power distribution, and installing smart meters.

“The central government will prioritise these measures and implement them in a time-bound manner,” Naik said.

Naik also highlighted the financial challenges in the power sector, said the release.

“In 2023-24, the nationwide power sector recorded a loss of 16.28 per cent. States like Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh, Andhra Pradesh, and Gujarat must focus on improving efficiency,” he said.

He emphasised the need for these states to adopt AI and modern technology, ensure timely payments by government departments, revise tariffs through State Electricity Regulatory Commissions, and reduce losses through smart meters and alternative funding methods.

The ministerial meeting was attended by energy ministers from Maharashtra, Tamil Nadu, Madhya Pradesh, Andhra Pradesh, Rajasthan, and Uttar Pradesh. Naik announced that the next meeting on the financial sustainability of power distribution companies will be held in UP.

During the meeting, Fadnavis also outlined Maharashtra’s initiatives to strengthen the financial position of Mahavitaran.

“Agriculture accounts for 28% of electricity consumption in the state, the highest in the country. Out of Mahavitaran’s Rs 1.12 lakh crore revenue, 49% comes from industries. The state government is taking steps to ensure financial stability in the power sector,” he said.

He also talked about the Mukhyamantri Solar Krishi Vahini Yojana, which promotes solar energy to reduce power distribution losses and electricity costs, the CMO release said. “This initiative will lead to lower electricity tariffs, benefiting both consumers and industries,” Fadnavis said.

The government has also decided to provide free electricity to agricultural pumps of up to 7.5 HP capacity in the 2024-25 financial year, he said.

“Currently, the government directly pays Mahavitaran for the electricity bills of 47 lakh agricultural pumps. Once our 16,000 MW solar power project is completed, these pumps will be fully powered by solar energy, significantly reducing Mahavitaran's electricity procurement costs,” Fadnavis said.

Mahavitaran has submitted a proposal to the Maharashtra Electricity Regulatory Commission to reduce electricity procurement costs by Rs 66,000 crore, said the CMO quoting Fadnavis.

“We plan to gradually lower electricity tariffs over the next five years and remove cross-subsidies on industries to make power more affordable for general consumers,” Fadnavis added.