SAC clears decks on outstanding power purchase liability in JK

Jammu and Kashmir government had cleared decks for restructuring of outstanding power purchase liabilities of Power Development Department through raising of debt by floating of bonds by Government.
The SAC, which met here under the Chairmanship of Governor N N Vohra approved the proposal for the restructuring of outstanding power purchase liabilities of Power Development Department through raising of debt by participating in 'UDAY' scheme and floating of bonds by Government, an Official Spokesman said.
Power Development Department has a huge revenue deficit during Financial Year 2014-15 amounting to Rs 3913.50 crore, the spokesman said.
UDAY scheme provides an opportunity to states to restructure their costly debt by reducing interest burden on DISCOM (State Government in case of J&K), he said.

The debt taken over by the state under this scheme would not be counted against the fiscal deficit limit of respective state in the financial year 2015-16 and 2016-17, he said.
UDAY scheme envisages state government to ensure that DISCOMs improve their operational efficiencies, particularly reduce Aggregate Technical and Commercial (AT&C) losses and cost of power procurement, so that ACS and ARR gap is bridged within the agreed frame work.

Further, as per the guidelines of 'UDAY' Scheme, the participating states would follow the timeline of targeted activities like compulsory feeder and DT metering, consumer indexing and GIS mapping, upgrade or change of transformers, meters smart metering of all consumers, DSM quarterly tariff revisions, etc as per timelines given for each activity.

This will ensure reduction of AT&C losses to 15 per cent in 2018-19 and reduction in gap between average cost of supply and Average Revenue Realized (ARR) to zero by 2018-19,he said.
UDAY scheme requires state government to ensure that DISCOMs improve their operational efficiencies, particularly reduce AT&C losses and cost of power procurement as per the agreed trajectory, so that ACS & ARR gap is bridged within the agreed frame work.
By opting for UDAY the state will accrue additional benefits including reduction of cost of power generation, participating states may get additional and priority funding, borrowings by J&K will not be counted against fiscal deficit limit in financial year 2015-16.