HYDERABAD: The Irrigation department is preparing a comprehensive financial restructuring plan to make various irrigation corporations financially self-reliant by strengthening their financial management and reducing borrowing costs.
Irrigation Minister N Uttam Kumar Reddy on Sunday directed the officials to prepare a detailed funding road map within 10 days. He also instructed them to engage experienced financial professionals to assist in debt restructuring and to find ways to reduce rate of interest on existing loans.
It was noted that some corporations were paying average interest rates of around 11 per cent on outstanding loans. Restructuring these loans at lower rates could result in significant annual savings. An indicative reduction from around 11.4 per cent to nearly 8.4 per cent could save approximately `250 crore annually, subject to verification of the loan portfolio and applicable terms.
While reviewing the financial status and operations of the irrigation corporations, the minister asked them to reduce dependence on direct budgetary support, focus on operational revenue and use it for servicing loans and interest liabilities.
Debt restructuring
Uttam, meanwhile, ordered completion of statutory audits of irrigation corporations and directed the officials to focus on the process so as to avoid any delay. The statutory audits for 2022–23 and other pending financial years should be taken up immediately, he said.
The minister also instructed officials to engage experienced financial professionals to assist the existing teams in preparing funding proposals, restructuring debt and improving the corporations’ financial presentation.
He sought a complete financial statement of every irrigation project. The statement should include the outstanding principal, rate of interest, annual repayment commitment, interest paid, loan maturity date, physical progress, amount required for completion and the time needed to finish the remaining work, he said.
The minister favoured prioritising projects that were nearing completion and required relatively limited additional funding. Instead of initially committing large amounts to major projects with substantial pending work, officials were told to identify projects that could be completed quickly with smaller investments.
Ability to raise funds
Completing such projects would create immediate irrigation benefits, improve the performance of the corporations and strengthen their ability to raise funds. The projects would be ranked according to physical progress, outstanding debt, funding required and the time necessary for completion, he said.
The meeting also considered using a corporation without legacy debt, repayment backlogs or a weak financial history to raise fresh resources. Such a corporation could obtain a new credit rating based on government support and the proposed revenue-generation model.
The Irrigation department was also asked to prepare a complete inventory of its properties, including their location, and potential for commercial use. The objective is to bring the documents into a clear and presentable form within about 15 days so that the government can move ahead with resource mobilisation, he added.
Projects & revenue generation
During the meeting, a few financing models for the corporations were identified, including revenue generation from solar projects
Minister Uttam Kumar Reddy suggested that unused or suitable lands belonging to irrigation corporations could be developed for solar power generation
Corporations can either establish their own independent power projects or lease the lands for the purpose. The revenue generated from these projects would become an assured source of income for the corporations
The meeting also discussed potential renewable-energy opportunities near irrigation reservoirs, including the Nizamsagar area
