Proposal for Restructuring of Outstanding PDD’s Power Purchase Liability Approved



In another significant decision, the State Administrative Council which in Jammu non Thursday under the Chairmanship of Governor N N Vohra approved the proposal for the restructuring of outstanding power purchase liabilities of Power Development Department through raising of debt by participating in ‘UDAY’ scheme and floating of bonds by State Government.

Power Development Department has a huge Revenue Deficit during Financial Year 2014-15 amounting to Rs 3913.50 crore, an official spokesperson said this evening.

The outstanding   liabilities of CPSU has reached to Rs 3537.55 crore at the end of September 2015 while the total liabilities of power purchases of the state is Rs 6706.73 crore including that of Jammu and Kashmir Power Development Corporation and the projected liability ending 3/2016 is Rs 6949 crore.

The interest / surcharge burden on account of these outstanding liabilities will be about Rs 1250 crore per annum which  will be off loaded after outstanding bills of Power Purchase are liquidated as per the approved restructuring proposal.

UDAY scheme provides an opportunity to States to restructure their costly debt by reducing interest burden on DISCOM (State Government in case of J&K). Debt taken over by the State under this scheme would not be counted against the fiscal deficit limit of respective State in the financial year 2015-16 and 2016-17.UDAY scheme envisages State Government to ensure that DISCOMs improve their operational efficiencies, particularly reduce AT&C losses and cost of power procurement, so that ACS and ARR gap is bridged within the agreed frame work.

Further, as per the guidelines of ‘UDAY’ Scheme, the participating states would follow the timeline of targeted activities like compulsory feeder and DT metering, consumer indexing and GIS mapping, upgrade or change of transformers, meters etc. smart metering of all consumers, DSM quarterly tariff revisions etc as per timelines given for each activity. This will ensure reduction of AT&C losses to 15% in 2018-19 and reduction in gap between average cost of supply and Average Revenue Realized (ARR) to zero by 2018-19.

UDAY scheme requires State Government to ensure that DISCOMs improve their operational efficiencies, particularly reduce AT&C losses and cost of power procurement as per the agreed trajectory, so that ACS & ARR gap is bridged within the agreed frame work. By opting for UDAY the State will accrue additional benefits including:

  1. i) Reduction of cost of power Generation.
  2. ii) Participating states may get additional/ priority funding through DDUGJY, IPDS, PSDF or other such schemes of MoP if they meet the operational milestones.

iii)    Borrowings by J&K will not be counted against fiscal deficit limit in financial year 2015-16.

       The Union Government and the Government of Jammu and Kashmir will enter into a bipartite MoU in order to improve the operational and financial efficiency of Power Development Department and the process of restructuring shall be completed by end 3/2016 under ‘UDAY’ scheme.

Meanwhile, the SAC also directed the constitution of a Committee under the Chairmanship of Chief Secretary, comprising Administrative Secretaries of Planning, Finance and Power Development Departments to examine and work out different modalities through which the power purchase liabilities of JKSPDC could be settled as per the Budget announcement of 2015. The Committee shall submit its report within one month.

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