*Power reforms made mandatory for benefits
Sanjeev Pargal
JAMMU, Mar 15: Jammu and Kashmir today signed historic Memorandum of Understanding (MoU) with Union Ministry of Power, which will save the State Rs 9800 crores in the long run as it promised to undertake series of reforms and issue power bonds worth about Rs 7000 crores, which were equal to the power liabilities of the State.
Union Power Secretary PK Pujari and Commissioner/ Secretary, Power Development Department (PDD), J&K Dheeraj Gupta signed the agreement in New Delhi this evening.
Gupta told the Excelsior on telephone from New Delhi after signing the agreement that Jammu and Kashmir will issue public bonds worth entire amount of Rs 7000 crores, which have accumulated as power liabilities due to power purchase from several companies and ever increasing interest rates on the pending amount.
“Presently, we are paying 18 per cent interest on the delayed payments to different companies, which was a huge amount. This interest amount will be reduced to 8.75 per cent to 9 per cent after the issuance of public bonds,’’ Gupta said, adding Rs 3537.55 crores worth bonds would be issued at the first instance by Jammu and Kashmir Finance Department while Rs 3500 crores worth bonds would be issued in the next phase totaling about Rs 7000 crores plus, which were equal to the amount of power purchase liabilities at this stage.
In turn, Dheeraj Gupta said, the Centre wants Jammu and Kashmir Government to initiate series of power reforms including reduction in losses, 100 per cent metering, reduction and subsequently complete end of power theft, financial discipline in power sector and increase in revenue.
“We are committed to all these power reforms,’’ he added.
Dheeraj Gupta said: “we are committed to improve operation efficiencies through UDAY. The main aim for signing this MoU is to restructure high interest rate of total discom debt thereby improving financial condition of State discom.”
The State Administrative Council (SAC) had in its meeting on March 10, chaired by Governor NN Vohra approved the State’s participation in the Government of India’s UDAY Scheme.
“The step has been taken to improve financial and operational efficiencies relating to distribution of power,’’ sources said.
Under the scheme, the State Government has been allowed restructuring of the outstanding debt of Rs 3537.55 crore on account of power purchased from various Central Public Sector Undertakings. The State Finance Department will now take measures to raise these bonds and put in place a structural servicing mechanism for achieving the objective, sources added.
Signing of the agreement was part of Government of India’s ‘Ujwal Discom Assurance Yojana’ (UDAY) Scheme, launched by the Union Power Ministry headed by Piyush Goel, which was aimed at revival of power distribution companies. This will save a total amount of Rs 9800 crores for Jammu and Kashmir, official sources said, adding that with the signing of agreement, Jammu and Kashmir has become ninth state to join UDAY scheme.
“Government of India and Jammu and Kashmir signed an MoU under the scheme UDAY for operational and financial turnaround of J&K’s power distribution department,” they said. According to sources, nine states have signed MoU under UDAY till date with the combined discom debt around Rs 1.94 lakh crore, to be restructured which is about 45 per cent of the total outstanding discom debt of Rs 4.3 lakh crore as on September 30, 2015.
Union Power Secretary P K Pujari said that with Jammu and Kashmir signing the MoU, “we will be able to tackle 50 per cent of total discom debt in the country’’.
With time, more States are expected to join UDAY thereby, benefits reaching to more people across the nation, he said.
The MoU would enable the state to raise funds at cheaper rate to clear the outstanding dues of around Rs 3,538 crore of CPSUs, which would entail an annual saving of Rs 1,200 crore (over 4 years) towards interest cost to the state, he said while interacting with media.
Further, it paves way for improving operational efficiency of the Power Distribution Department of the State, he added.
Under the agreement, the reduction in AT&C losses and transmission losses to 15 per cent and 4 per cent, respectively, is likely to bring additional revenue of around Rs 7,150 crore during the period of turnaround.
State will also gain Rs 785 crore due to coal reforms.
Demand side interventions in UDAY such as usage of energy-efficient LED bulbs would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in the State of Jammu and Kashmir. The gain is expected to be around Rs 590 crore.
An overall net benefit of approximately Rs 9,800 crore would accrue to the state by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc during the period of turnaround.
The scheme would allow speedy availability of power to around 108 villages and 3.56 lakh households in the state that are still without electricity.
The signing of MoU under UDAY would enable the State of Jammu & Kashmir to raise funds at cheaper rate to clear the outstanding dues of around Rs 3538 crore of CPSUs, which would entail an annual saving of Rs.1200 crore (over 4 years) towards interest cost to the State, sources said.
The MoU further paved way for improving operational efficiency of the Power Development Department of the State. Through compulsory Distribution Transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, feeder audit etc. AT&C losses and transmission losses would be brought down, besides eliminating the gap between cost of supply of power and realisation. The reduction in AT&C losses and transmission losses to 15% and 4% respectively is likely to bring additional revenue of around Rs 7150 crore during the period of turnaround, they added.
While efforts will be made by the Power Development Department of the State to improve its operational efficiency, and thereby reduce the cost of supply of power, the Central government would also provide incentives to the DISCOMs and the State Government for improving Power infrastructure in the State and for further lowering the cost of power.
The Central schemes such as DDUGJY, IPDS, Power Sector Development Fund or such other schemes of MOP and MNRE are already providing funds for improving Power Infrastructure in the State and additional/priority funding would be considered under these schemes, if the State/DISCOMs meet the operational milestones outlined in the scheme.
The State shall also be supported through additional coal at notified prices and in case of availability through higher capacity utilization, low cost power from NTPC and other CPSUs. Other benefits such as coal swapping, coal rationalization, correction in coal grade slippage, availability of 100% washed coal would help the state to further reduce the cost of Power. The State would gain around Rs 785 crore due to these coal reforms.
Demand Side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & air-conditioners and efficient industrial equipment through PAT (Perform, Achieve, Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in the State of Jammu & Kashmir. The gain is expected to be around Rs 590 crore.
An overall net benefit of approximately Rs 9800 crore would accrue to the State by opting to participate in UDAY, by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc. during the period of turnaround, sources said.
The ultimate benefit of signing the MoU would go to the people of Jammu & Kashmir. Reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers. Further, financially and operationally healthy State Power Distribution department would be in a position to supply more power.
“Higher demand for power would mean higher PLF of Generating units and therefore, lesser cost per unit of electricity which would again mean lesser cost per unit of electricity to the consumers. The scheme would allow speedy availability of power to around 108 villages and 3.56 lakh households in the State that are still without electricity. Availability of 24×7 power to hitherto unconnected villages/ households etc. would boost the economy, promote tourism and industries, thereby improving employment opportunities for the people of the State,” sources said.
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