Srinagar: An MoU for availing of the second tranche of the loan for Rs. 5444.47 crores was signed between Jammu and Kashmir Power Development Department (PDD), J&K Power Development Corporation Limited (JKPDCL) and state Power Finance Corporation (PFC) on Saturday. Under the MoU, loan assistance of 11024.47 crores has been approved for J&K under the Atmanirbhar Bharat Abhiyan (liquidity infusion scheme in DISCOMs.) This will enable J&K to clear its outstanding payments under Power purchases made by it.
The loan assistance will enable savings of nearly Rs. 1000 crore to J&K on account of difference in the rate of interest (late payment surcharge) that was otherwise being charged by the creditors against these power purchase liabilities.
The MoU was signed in the presence of the Principal Secretary Power Development Department, Sh Rohit Kansal at Srinagar, Director Finance PDD Mr M. H Malik, Chief Engineers of JKPCL Mr. Mohammad Yousuf Baba and General Manager of PFC Mr Madhu Chakraborty.
The agreement for availing of the first tranche of the loan for Rs 5580 crores had already been signed by the department with REC and PFC in October this year.
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It may be recalled that under the Atmanirbhar Bharat Abhiyan the Government of India had announced a special package of Rs 90000 crore for liquidity infusion in DISCOMs for clearing of their power purchase liabilities to tide over financial crises owing to low power recoveries.
In pursuance, Jammu and Kashmir immediately started fulfilment of pre-loan requisites and signed the MoU for the first tranche of the loan of Rs. 5580 crores through identified financial organizations i.e Power Finance Corporation Ltd. (PFC) and Rural Electrification Corporation Ltd (REC) in October 2020. With the signing of today’s MoU, J&K would be able to lift the full quantum of loan of Rs 11024.47 crores allotted to it enabling it to fully liquidate its power purchase liabilities as accumulated on June 30, 2020.
J&K has an annual power purchase bill of Rs. 6000 to 6500 crores against which the power recoveries are just 2200 crore to 2300 crore making for an annual deficit of Rs. more than 4000 crores. The power purchase liability of J&K towards various CPUs ending June 2020 had swollen to Rs. 11500 crores which were being charged at a late payment surcharge (interest rate) of 18% per annum (late payment surcharge).
