J&K presents power Budget

With an aim of make power-starved Jammu & Kashmir self-reliant in energy in three years, Deputy Chief Minister Muzaffar Hussain Baig, who holds the finance portfolio also, presented on Monday a separate power budget, for the first time in the state's history, in the assembly in Jammu. This is first of its kind in the country as well.

Baig said power reforms and tariff recoveries were at the centre stage of his maiden power Budget.

Baig said, "The Union government has given the state a power reform grant of Rs 1,300 crore. This will continue for three years, during which the state is expected to initiate power reforms and have a credible plan of action."

Baig said revenue receipts of the state government in 2005-06 aggregated to Rs 1,480 crore, excluding the power receipts""amounting to Rs 292 crore.

"The power department commands only 10 per cent of the state's revenue receipts and more than 50 per cent of the disbursements. Should the power sector match its receipts with expenditure, the state doesn't need to borrow anything from anyone. Indeed, if the power problem is taken care of, we will be in a position to finance a Rs 3300 crore state plan without any special assistance from the central government."

Baig said the basic problem was of a serious shortfall in energy supply as compared with the requirement.

"Assuming that we were to meet the entire demand for power, the purchase of power alone would on current rates be in the range of Rs 2,300 crore. Add to this, the salaries of Rs 250 crore of PDD, Power Development Corporation's (PDC) expenditure of Rs 96 crore, Operation and Maintenance's spending of Rs 103 crore, depreciation allowance of Rs 86 crore and Rs 20 crore for interest, we have an estimated power bill of Rs 2,855 crore per annum. With recoveries of Rs 500 crore, the net loss will be Rs 2,355 crore. This is more than the state's own revenues of Rs 1,900 crore."

Baig said from this year the government had started a process whereby the power sector would assume responsibility for earning and expanding its own income.

"You may like to call this a sensitising mission. Like any other budget, the power sector too should overtime seek to align receipts and expenditure and also find resources for modernisation of the organisation."

Baig said over the next three years, a major portion of funds would flow to PDD as non-debt creating support from the general Budget. "After that, for the next two years or so, this support will be in the form of loans. By then, PDD will need to generate adequate resources for servicing the inflows. So we have to put in place a 3-5 year strategy for the power sector to be financially independent."