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Finance Department to scrutinize power subsidies as losses mount

Move seen as step towards cutting down on subsidized energy to consumers As J&K continues to grapple with power losses, the State Finance Department has made it mandatory for Power Development Department to seek prior approval for authorization of the subsidies for “greater transparency”. But the decision is seen as a move towards cutting down on the subsidies to consumers in coming times. A senior official said the supply of subsidized power to different categories of consumers was one of the reasons for revenue deficit on account of power tariffs. “In order to maintain transparent accounts and separate the subsidy part from sale of power, the subsidy being given to various categories of consumers would now be quantified by Power Department and submitted to Finance Department for its authorization,” said the official. The Aggregate Technical and Commercial Losses (AT&C), resulting from the losses due to poor infrastructure and gaps in collection of tariffs, has been eating into State exchequer though the losses have come down from 61.30 percent in 2014-15 to 58.82 percent in 2015-16. The Economic Survey which was earlier this month tabled in the State Assembly has also termed the high AT&C losses as “concern” saying the losses were a major challenge to fiscal health of Jammu and Kashmir. The State Finance Minister Haseeb Drabu said the decision to get power subsidies approved from the Finance Department was aimed to bring to fore the “true picture” about the losses in the power sector. “There is a notion that the gap between the annual tariff collections and the actual cost at which the energy is purchased are the losses suffered by the Government in the power sector. This isn’t true as the state purchases the energy at one cost and supplies it to the consumers at subsidized rates. We want to separate the subsidy component from the losses to make things transparent and bring to fore the true picture of the losses,” said Drabu. He said the government has no problem in supplying free energy to people living below poverty line but somewhere “we will have to think about quantum of the power that is supplied to other categories of consumers on subsidized rates.”