In a significant development, the government of Union Territory of Jammu and Kashmir (J-K) will get 4,580 crore rupees special long term loan from the Government of India for clearing its power purchase liabilities.
Documents accessed by a local news agency, Kashmir News Observer(KNO) reveal that Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) have agreed to grant Rs 2,290 crore each as special long term loan to J&K UT to assist it in clearing the power purchase liabilities of different central power generation companies like National Thermal Power Corporation Limited (NTPC), National Hydroelectric Power Corporation(NHPC) and charges of transmission companies.
The loan is part of Atmanirbhar Bharat Abhiyan package, which was unveiled by the Government of India for revival of economy after outbreak of novel coronavirus.
Under the package, the Union government has allocated Rs 90,000 crore financial package to assist power distribution companies (Discoms) who have been under stress during the lockdown caused by COVID-19 pandemic.
The Power Finance Corporation and Rural Electrification Corporation would extend special long term transition loans up to 10 years to DISCOMs. According to the documents, the 10-year loan has three-year moratorium period and is repayable in 84 EMIs (Equated Monthly Installments).
The package has been sanctioned at a time when J-K is struggling to clear liabilities of Central Public Sector Undertakings (generating companies), Transmission Companies and Independent Power Producers. The documents reveal that J&K owes Rs 9646 to them on account of power purchases and transmission charges.
Now, the administration of Union Territory will require to execute Memorandum of Agreement (MoA) with PFC and REC to avail the loan.
In 2016, J-K joined Ujjwal DISCOM Assurance Yojana (UDAY) scheme. Under the scheme, the State Government was permitted to restructure the outstanding debt of 3537.55 crore rupees on account of power purchased from various Central Public Sector Undertakings (CPSUs).
J-K power purchase liabilities are swelling due to massive gap between power purchases and revenue generated from consumers. (KNO)