REC Limited has approved a ₹27.9 billion (~$380.9 million) loan to the Jammu Kashmir Power Corporation Limited (JKPCL) under the liquidity infusion program of the Indian Government’s Aatmanirbhar Bharat initiative.

The agreement was signed by the Government of Jammu and Kashmir, the JKPCL, REC, and the Power Finance Corporation Limited (PFC). REC said that this loan was aimed at financially supporting distribution companies (DISCOMs) amid the ongoing crisis and to help them fully discharge their dues to generation and transmission companies for power purchased and transferred.

REC and PFC have so far approved ₹1.08 trillion (~$14.7 billion) under the program and have released about ₹300 billion to DISCOMs, according to REC’s press release. The amount released is part of the ₹900 billion (~$12.29 billion) stimulus package announced by the Finance Minister in May, which was later increased to ₹1.2 trillion (~$16.4 billion).

The amount approved under the program will be used to clear the outstanding dues of central public sector undertakings (CPSU), generation and transmission companies, independent power producers, and renewable energy generators as of March 31, 2020, the Ministry of Power said in a separate statement.

In February last year, NTPC had come down on the state power department and warned of restricting power supply due to non-payment of dues. As per the letter, the total outstanding dues had reached ₹19.84 billion (~$280.32 million), out of which ₹16.26 billion (~$229.67 million) was pending for more than 60 days. Some dues had been pending for almost a year.

Back in 2018, the Ministry of New and Renewable Energy (MNRE) had announced a plan for the implementation of 23 GW of ultra-mega solar projects in the Leh and Ladakh regions of Jammu & Kashmir. Phase-I of the project was to set up 2,500 MW solar capacity in the Kargil region and 5,000 MW in Leh district. Solar Energy Corporation of India Limited (SECI) has already issued a tender for 7.5 GW of grid-connected solar power projects to be developed in the districts of Leh and Kargil. Another tender for 14 MW of solar projects with 42 MWh battery energy storage system (BESS) (7MW/21 MWh each), slated to be developed in Leh and Kargil is also due for auction.

Speaking in a Mercom webinar, SECI’s Director, Shailesh Kumar Mishra, had said that the government has been working on this program with renewed focus. After Rajasthan and Gujarat, Ladakh is expected to be the next major hub for renewables in India. You can watch the webinar here.

In the background of such a large solar capacity coming up in the region, the liquidity infusion to beef up the financial strength of the DISCOMs in the region is apparent.