Centre-Jharkhand scheme to reduce power utility's debt

The central and the Jharkhand governments and the Jharkhand Bijli Vitran Nigam Limited (JBVNL) signed an agreement that would give an overall net benefit of around Rs.5,300 crore to the power utility through debt reduction.

They signed a Memorandum of Understanding under the Ujjwal Discom Assurance Yojana (UDAY) scheme.

"The signing of the MoU would have significant benefits for the JBVNL, with the state of Jharkhand taking over 100 percent liabilities of outstanding dues with CPSUs (Central Public Sector Undertaking) and 75 percent of the outstanding debts of JBVNL as existing on September 30, 2015," an official statement said here on Tuesday.

The JBVNL would have annual savings of almost Rs.115 crore in annual interest costs through reduction of debts of the JBVNL from Rs.1,165 crore to Rs.291 crore. The balance debt would be repaid with fresh state guaranteed distribution companies (DISCOM) bonds to be issued at coupon rates around 3 percent less than the average existing interest rate.

As a special dispensation, the JBVNL would also be able to wipe out its outstanding dues amounting to Rs.6,000 crore to the Central Public Sector Undertakings. This would help the DISCOM to save more than Rs.1,000 crore annually by way of surcharge on outstanding dues to power generators, it added.

Jharkhand has committed to improve the billing efficiency from 73 percent in 2015-16 to 85 percent in 2018-19 and collection efficiencies from 89 percent in 2015-16 to 100 percent in 2018-19.