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Jharkhand-Centre scheme to reduce power utility’s debt

New Delhi/Ranchi, Jan 5: 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.5300 crore to the power utility through debt reduction.

They signed a Memorandum of Understanding under the Ujjwal Discom Assurance Yojana (UDAY) scheme in New Delhi in the presence of CM Jharkhand, Mr. Raghubar Das.

“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.

UDAY yojana will be implemented on those state govt. owned electricity companies under which the state govt. will take over the due liabilities which the central govt. will put out of the FRBM limit & it will not be counted in the fiscal deficit.

Hence there will be no adverse effect on the developmental priorities of the state govt.

Discom generally takes loan on 12-14%. In case it is provided loan on 8%, there will be temporary benefit of 4-6%. Discom will have to improve its transmission capacity in timeframe & minimize loss so that AT & C loss can be reached to 15% by financial year 2018-19. At the same time, ACS & ARR difference should be brought to 0% by 2018-19. Discom will ensure transparency in purchase of electricity.

JBVNL owes provisional dues of Rs. 7431 crore to DVC, CIL/ CCL. After waiving 60% of delayed payment surcharge, JBVNL will have to pay these CPSUs Rs. 6050 crore. Hence after the DPS waiver, the govt. will have waiver of Rs. 1380 crore under UDAY Yojana.

The State govt. will take over 75% of the accumulated debt in 2015-16 & 50% in 2016-17. It will lead to emancipation from the debt & the state govt. will be able to get loans/ funds from open market. It will improve transmission capacity & the govt. won’t have to resource funding every year.

The CM in his address said that it will not only strengthen the financial capacities of JBVNL but provide electricity 24x 7 with transparency. The CM said that 434 villages out of 2200 are situated on mountains & the govt. has targeted to supply them electricity by Dec. 2016.

He said that renewable source of energy will also be considered for minimizing temperature by 2 degree. He said that the govt. has targeted to produce 1220 MW electricity in this financial year.

The CM expressed his happiness on being first to be connected with UDAY, though 16 states have expressed their desire to get connected with UDAY.

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