Managing power crisis

Power crisis is a recurring phenomenon in our State. Despite many exercises and many reforms, the crisis continues generating no hope of reversing the situation. In order to overcome the big gap between production and distribution, various measures are being attempted. We purchase power from the national grid but shortfall in revenue continues to be there. The Governor is concerned how the huge revenue deficit to the tune of over 7,000 crore rupees can be managed. This is liability haunting the State.
The Governor is genuinely concerned about unsatisfactory power situation in the state and is pursuing the matter. Only recently he has directed the PDD to ensure that all power projects expedite completion and that their completion is time bound. However, that process will go on in normal course, but the urgency is about the liabilities which the State must clear as early as possible.
The State is paying interest at the rate of 18 per cent on the delayed payments to different companies. If this situation continues, liquidation of this enormous liability may not mature at all. Therefore, the State Administrative Council decided that the State may float bonds worth 7,000 crore rupees almost equal to the amount of liabilities outstanding against the State. As a result Commissioner-Secretary Power Development Department has signed a Memorandum of Understanding with the Union Power Secretary in New Delhi according to which the J&K State will issue public bonds worth entire amount of rupees seven thousand crore equal to the liabilities that are outstanding.  It is believed that after issuing of bonds the interest rate will come down to 8.75 per cent to 9 per cent and this will be a big relief for the Department. In the first instance public bonds worth Rs. 3537.55 crore will be issued by J&K Finance Department while Rs 3500 crore worth bonds would be issued in the next phase totaling about Rs 7000 crore plus, which were equal to the amount of power purchase liabilities at this stage. This is how financial restructuring of the PDD has been envisaged and for which the MoU has been signed. The signing of MoU does not mean that all that needs to be done in the matter has been done. There are some specific works which the Centre desires the State Government to take up simultaneously. Broadly speaking, these are the State 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.
The Centre has given the State to understand that it is committed to improve operation efficiencies through ‘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. The real purposes for signing this MoU is to restructure high interest rate of total discom debt thereby improve financial condition of State discom.
The State Administrative Council (SAC) had in its meeting on March 10, approved State’s participation in the Government of India’s UDAY Scheme. Consequently, the step is expected to improve financial and operational efficiencies relating to distribution of power.  Officials opine that signing of MoU will save a total amount of Rs 9800 crore for Jammu and Kashmir.
It is hoped that with this big and significant decision, the long standing power crisis in the State may find some relief. However, the crucial question is the implementation of other reforms which the Union Ministry of Power has suggested. That is what the PDD is expected to do. Unless those reforms are introduced forthwith, signing of the MoU may not really be of much use except that there will be some relief in clearing the liabilities. We, therefore, expect the PDD to gird up its loins and be ready for undertaking the essential reforms already suggested in the MoU with the Union Ministry of Power.

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