NEW DELHI: The government’s ambitious $7-billion debt recast scheme for power distribution companies (discoms) has made a promising start with key states coming on board, and bonds worth Rs 70,000 crore to Rs 1 lakh crore likely to be issued in the next three months to help clean up the balance sheets of these ailing utilities, Power, Coal and Renewable Energy Minister Piyush Goyal said.He said all states are likely to accept the scheme, which will make every state’s discom profitable in three years, ending decades of inefficiency and mismanagement in the most vital link of the power sector.Discoms’ losses and inefficiency have left power plants idling with surplus capacity while consumers have suffered long blackouts.A dozen states have already opted for the scheme and several others have said approvals would come very soon, the minister said. "I have confidence that every state will agree to it, sign up and give benefit to people and consumers … Within the next three years, all discoms in the country should be in profit," he told ET in an interview.Goyal said the scheme had the overwhelming support of all stakeholders, particularly bankers, who had forcefully backed it. The success of the Uday package for discoms is vital for banks, which have lent Rs 4.3 lakh crore to these utilities. It is also crucial for India’s ambitious clean energy programme, revival of stranded thermal power projects and Prime Minister Narendra Modi ’s vision to supply affordable 24x7 electricity to all.Under Uday, states have been promised attractive incentives such as cheaper power and more coal if they adopt the scheme and take over 75% of the debt of ailing discoms. States have to issue bonds in the market or to the lenders while the debt that is not taken over by the state will be converted into loans or bonds with an interest rate not exceeding the bank’s base rate plus 0.1%."We have started hearing from states how they are planning to launch bonds to bring down their interest costs … Probably by March, we’ll easily see Rs 70,000 crore to Rs 1 lakh crore worth of bonds coming out of the power sector," Goyal said.The minister said work had already begun and states, which had big incentives to adopt the scheme, were aspiring to be the first to formally join it. "It has already started. We have started hearing from states how they are planning to launch bonds to bring down their interest costs. We are working with states to reallocate distribution of coal and usage of coal in a manner by which we can reduce the freight cost and power cost. NTPC has already started working on reducing power cost. The benefit goes straight to consumers," Goyal said.He said Uday had a bottoms-up approach which did not impose the government’s or his own view on states. "It’s a consultative approach. We’ve engaged with everybody collectively and individually." The government held more than 200 meetings, including over 50 that Goyal himself conducted, before finalising the scheme.Goyal said he did not oppose supply of free power to weaker sections provided this was funded by the states using cross-subsidies and budgetary support. He said the focus was on increasing efficiency and reducing costs. The minister does not see raising of tariffs as a reform. There is a race among states on which will be the first to sign an agreement with the Centre, he said. "A lot of painstaking effort has gone into making this scheme.""I had a meeting with all the bankers who had discom exposure. Each one individually and collectively reiterated that they are extremely happy with the scheme. They couldn’t have asked for a better scheme," Goyal said, adding that some states are complaining the scheme is designed to benefit banks more.