May 2016 News
Centre Announces Rs 3537 Cr Grant For J&K To Clear Power Liabilities14 May 2016
The Daily Excelsior
Srinagar: In a major initiative to overcome mounting liabilities of Jammu and Kashmir Government on account of power purchase every year, the Centre Government (Union Power Ministry headed by BJP leader Piyush Goel) have sanctioned one time grant of Rs 3537.55 crores to the State to meet the liabilities and issue public bonds for remaining amount. Official sources told the Excelsior that Piyush Goel has informed the State Government that they would be getting Rs 3537.55 crores from the Union Government very shortly to meet the power liabilities and that the State Government can go for public issues of the remaining amount to liquidate the liabilities and start afresh on the power front. 'Jammu and Kashmir, for the first time, will be getting such a huge grant to meet the liabilities at very nominal interest rates under the Central Government's prestigious scheme named UDAY (Ujwal DISCOM Assurance Yojana), which had been launched by the Government of India recently for the State Governments,' sources said. The present liabilities of Jammu and Kashmir on account of electricity stood at Rs 6950 crores. With Union Government agreeing to give Rs 3537.55 crores worth one time grant to the State Government under UDAY, the liabilities will be reduced to Rs 3413 crores. The Power Development Department of the State Government will then go for issue of public bonds worth Rs 3413 crores at nominal interest rates to completely wipe out the liabilities of the State on account of power purchase bill, which had been piling up over the years and had, at present, reached an all time high at Rs 6950 crores, creating major financial burden for the State. When contacted Deputy Chief Minister Dr Nirmal Singh, Incharge Power Development Department, confirmed that the Union Power Ministry headed by BJP leader Piyush Goel had agreed to release Rs 3537.55 crores to the J&K Government under UDAY for clearing the debt liabilities, which would be a major boost and incentives for the State Government in clearing the liabilities, which had been piling up for past several years but the previous Governments didn't take any initiatives to clear them. Dr Singh said for remaining liabilities i.e. Rs 3413 crores, the Power Development Department will issue public bonds very shortly. The process for securing the Central grant and issuance of public bonds has been initiated, he added. Sources said Jammu and Kashmir Government will have to pay very nominal interests to the Centre for the grants taken by it under UDAY scheme and public bonds. In turn, it would be able to clear huge liabilities on account of power but would have to ensure that the liabilities don't start piling up again, which was an uphill task as the State hadn't been able to match power revenue generation and power purchase bill, leading to the deficit. Jammu and Kashmir Government had purchased power worth Rs 5293 crores during 2015-16. However, the power purchase bill has been proposed at 5247 crores for current financial year of 2016-17. During 2015-16, the budgetary allocation for power purchase was just Rs 3785 crores but the power purchase bill stood at Rs 5293 crores, creating a deficit of Rs 1508 crores. For current financial year of 2016-17, the PDD's budgetary allocation on account of power purchase was yet to be fixed as general budget for current financial year was due to be presented on May 30 in the Legislature. According to sources, the Centre had launched UDAY Scheme for permanent solution to financial mess in several States on account of power purchase bill. This will be for the first time when the State Government would be getting such a huge grant (Rs 2527.55 crores) for power purchase. During three years tenure of Congress leader Ghulam Nabi Azad as the Chief Minister from November 2005 to July 2008, the then UPA Government at the Centre had given J&K Rs 3600 crores worth power grant (Rs 1200 crores each for three years). However, the grant was not used for power reforms and was instead diverted to pay dues to the State Government employees on account of 6th Pay Commission.