#Budget 2016-17: Power Sector can Change Fortunes of J&K, says FinMin Drabu



FinMin Dr Drabu prior to his Budget 2016-17 speech. (Photo: Bilal Bahadur/KL)
FinMin Dr Haseeb A Drabu prior to his Budget 2016-17 speech. (Photo: Bilal Bahadur/KL)

Asserting that the Power Sector of J&K can turn around the fortunes and put economy on the trajectory of high and sustainable growth, Minister of Finance, Dr Haseeb A Drabu, Monday tabled the Power Budget 2016-17 in the State Assembly.

With an eye on enhancing the State’s hydro-power generation of the present 1,419.37 MWs, which contributes 45% of the total energy requirement, the Finance Minister said JKSDPC has drawn up a roadmap for systematic capacity addition in the 12th/13th Plan which is anticipated to make the State energy surplus, an official spokesperson said this evening.

“However timely DPR approvals/clearances, contracting, and works monitoring would be key to ensuring timely commissioning of the proposed projects,” he said, adding that the State Government would remove the impediments to the investments by the Independent Power Producers in small hydel projects by bringing in a more investor-friendly policy soon.

The Finance Minister said the State Government faces a challenging task of providing each household round the clock access to electricity and improving the quality of life of its citizens through higher electricity consumption.

He said J&K has unfunded gap of Rs 2,988 crore in the power sector with deficit in financial terms touching Rs 3,927 crore. “Despite incurring such losses, we are not able to provide adequate quantity and appropriate quality of power to our people. If the power sector financials are taken care of, the state will not have a budgetary gap. Indeed, it will be a surplus,” he said.

The Finance Minister said the J&K government has already announced debt restructuring by raising market borrowings for about Rs 7,000 crore in the form of power bonds to clear off accumulated power liabilities. During the course of last year, the Ministry of Power, GoI also announced ‘UDAY (Ujjwal Discom Assurance Yojana) Scheme with a similar intent.

“As provided for under the Scheme, an MOU was signed by Power Development Department with Government of India for raising a loan of Rs. 3537.55 crore, out of which Rs. 2140.00 crore has been lifted and Rs. 1397.55 crore is to be lifted during the current financial year. The balance power purchase liability shall be restructured by the State Government by issuing Bonds. Once the entire liability is so restructured, there would be a net saving of about Rs 700 crore on account of reduced interest/surcharge burden,” he said.

The Finance Minister said the State’s peak demand for power has grown by over eight percent during the period from 2011 to 2015 while peak deficit has decreased from 28 per cent in FY12-13 to 23 per cent in FY15-16. “High share of hydropower in the generation mix combined with outages in transmission and generation sources has led to seasonal variations in power availability situation in the State,” he said.

He said 107 villages and 3.56 lakh households are un-electrified which are planned to get electricity by the end of 2018-19. “Our Government has finalized the PFA Roadmap document in consultation with the Ministry of Power and its agencies like REC, CEA, PFC and BEE, highlighting all-encompassing power sector interventions including generation, transmission, distribution, renewable energy and energy efficiency/DSM measures proposed to be implemented during FY16 to FY19,” he said.

Dr Drabu said the Government will continue to support the power sector through targeted capital subsidy schemes aimed at supporting the poor and marginal consumers, and elimination of regional disparities in the State. “Out of the 6,337 villages in the State, 98.3% i.e. 6,231 villages have been electrified while 1.7% i.e. 108 villages are still un-electrified which are covered and sanctioned under DDUGY and RGGVY,” he said.

The Finance Minister said the JKPDD has planned 100 percent metering for reduction in commercial losses and investment plans, especially in the distribution and sub transmission sector, which are targeted towards bringing AT&C losses to 15% from 59% by FY19-20.

Announcing a slew of measures for reforming the Power Sector, the Finance Minister said the Government in September 2012 ordered for unbundling of JKPDD by setting up Jammu & Kashmir State Power Transmission Company Limited, Jammu & Kashmir State Power Trading Company Limited, Jammu Power Distribution Company Limited and Kashmir Power Distribution Company Limited.

“However, unbundling continues to be a work in progress as the newly formed companies are yet to take charge of their respective functions. Unbundling will ensure transparency and efficiencies in operation and reduce the costs with concomitant gains to the consumers. The Government is committed to taking the process of unbundling of the Department further without prejudicing the service conditions of any of the employees,” he said.

“During the 12th Plan period, the fund layout for RGGVY of Rs. 101.28 crore for 25 un-electrified villages has been approved. Further, the State has proposed electrification of remaining villages under DDUGJY scheme covering 83 un-electrified villages with a fund layout of about Rs. 619.67 crore. The project is to be implemented by 2017-18,” he said.

The Finance Minister said under R-APDRP, 30 towns (19 in Kashmir & 11 in Jammu) with a population of above 10,000 as per 2001 census have been identified as project areas in the State. “GoI has sanctioned Rs 191.25 crore for part-A and Rs 1,665.27 crore for part-B under the R-APDRP scheme on 90:10 funding. The State share shall be funded through State Capex Budget,” he said.

He said the DPR for SCADA/DMS for Srinagar and Jammu cities has been approved by GoI at an estimated cost of Rs. 52.89 crore. “For execution of Part-B of the program, 2 cities and 28 towns have been divided into nine clusters, 4 in Jammu Division and 5 in Kashmir Division. The ground level implementation in the key cities has already commenced and shall be completed during the year 2016,” the Finance Minister said.

The Finance Minister said under IPDS scheme, 86 Statutory Towns in J&K have been covered under 12 circles. “Detailed Project Reports (DPRs) totalling Rs.450.39 crore covering 12 circles have been formulated and scrutinized at a revised cost of Rs. 444.50 crore. The project is to be implemented by 2017-18,” he said.

The Finance Minister said the Centre has approved an amount of about Rs 11400 crore under the Prime Minister’s Relief and Reconstruction Program to strengthen Generation, Transmission and Distribution network with Advanced Technology Interventions including, construction of smart grids at Gulmarg, Pahalgam, Rangreth, Katra and Bari-Brahamana.

“Rs 2000 crore have been provided under the PMRRP for preparation of DPRs and implementation / execution of Small Hydel Projects. Similarly, Rs 4153 crore have been provided as the State equity towards Pakal Dul and other Hydro Electric Projects. Under augmentation of distribution system, Rs 3790 crore have been earmarked for Capital Cities, four industrial estates at Khonmoh, Lassipora, Samba and Kathua, tourist destinations, Heritage Sites and important places of pilgrimage. Action Plan has been submitted to the Government of India and the projects will kick-start soon. All these measures outlined above will reduce Rs. 4.54 per unit gap by around Rs 2.00 per unit,” he said.

The Finance Minister said while the State Government has not increased any tariff for the last two years, the average cost of supply has grown by about 7%. “Reasonable degree of tariff hike from time to time is required to meet the operating costs. By introducing efficient tariff design, ‘Time of Day’ rate structure, administrative interventions, system improvement, consumer metering and considering measures to reduce reactive energy will serve the economy with reliable power,” he said.

The Finance Minister said the tariff petition has already been filed of 13.5% hike with the State Electricity Regulatory Authority in all categories except hike in State/Central departments, Public Street Lighting and Public Water Works to equal prudent cost of supply without passing inefficiencies of the system to any category of consumer in the State.

“The JKPDD in its tariff petition before JKSERC has proposed to recover the prudent cost of supply by bringing high-end categories like State/Central Government Departments, Public Street Lighting, Public Water Works at par with the prudent cost of supply, by giving a reasonable tariff hike to the consumer categories like Domestic, Non-Domestic Agriculture and Industrial without any tariff shock to these categories. The corresponding budgetary provisions shall be provided to respective departments,” he said.

He said the Government will build in and provide direct subsidy to the consumer through the JKPDD. “This would ensure that the JKPDD graduates to a more transparent accounting system and the consumers, especially the vulnerable and marginal, are insulated from sudden impact of tariff hikes from time to time. For the current Year, I propose to provide a subsidy of Rs. 1728.37 crore on this account,” he said.

The Finance Minister also extended the Power Amnesty Scheme, which provides waiver of 100% surcharge on electricity charges with the stipulation that the domestic consumers make the outstanding payment by or before March 31, 2016, till December 31, 2017.

The Finance Minister said a MOU has been signed with GoI for capacity building of JKPDD to undertake Demand Supply Management (DSM) measures. “As a concrete first step towards promoting energy efficiency culture across the State, our Government has decided to launch Unnat Jyoti by Affordable LEDs for All (UJALA) programme to be implemented across the State in collaboration with EESL. UJALA seeks to promote high quality LED lighting in the domestic sector by overcoming the high initial/ entry cost barrier. DELP will enable sale of LED bulbs from designated places at a cost that is much less than the per unit market price of Rs.400-500 as replacements of Incandescent Lamps (ICLs) and Compact Fluorescent Lamps (CFLs),” he said.

Under the scheme, the Government will provide 5 LED lamps of 9W each to every registered consumer at a highly subsidized rate of Rs 20 per lamp and more than 5 LEDs will also be made available at a cost of around Rs. 100 each. “The distribution of 80 lakh LED bulbs in the State will help reduce peak demand in the State by about 250 MW and will save energy consumption by 260 KW translating into an annual saving of about Rs 130 crore. I am making a provision of Rs 64 crore in the Budget for the current year towards the subsidy on this account,” he said.

The State Government said the streetlights in two Municipal Corporations of Jammu and Srinagar and other municipalities across the State would be replaced in a phased manner with LED lights with full metering and dedicated feeders/phase wires.

The Finance Minister said the State Government has created two dedicated project wings, one for Kashmir and one for Jammu with creation of 187 posts for implementation of flagship programmes/centrally sponsored schemes in the Power Sector.

“In addition to these two wings, one Project Management Unit (PMU) has also been created at the Secretariat level. Similarly, for the Chenab Power Management and Training Institute, the basic infrastructure at Baglihar village, which had come up during construction of Stage-I of Baglihar HEP, has been suitably modified to meet the requirements of the training institute, and the matter is being pursued with the Central Institute of Rural Electrification (CIRE) Hyderabad, REC, Government of India and Ministry of Power to sign the MoU and kick start the initiative. Once operational, this will go a long way in providing the much needed impetus to the training needs of the power sector,” he said.

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