Uttam pushes major irrigation finance reforms

metro india news  I hyderabad

The Telangana Government is preparing a comprehensive financial restructuring plan to strengthen the financial health of irrigation corporations, reduce borrowing costs and make them financially self-reliant.

Irrigation and Civil Supplies Minister N. Uttam Kumar Reddy on Sunday directed officials to prepare a detailed funding roadmap within 10 days and engage experienced financial professionals to assist in debt restructuring, funding proposals and improving the corporations' financial presentation to secure long-term loans at lower interest rates.

Chairing a high-level review meeting on the financial status and operations of irrigation corporations, the Minister stressed the need to reduce dependence on direct budgetary support by developing sustainable revenue streams that can service loans and interest liabilities.

One of the key proposals discussed was generating revenue through solar power projects on unused or suitable land owned by irrigation corporations. The corporations could either establish their own solar power plants or lease the land to private developers, creating a steady source of income. Officials were also asked to examine the technical and commercial feasibility of renewable energy projects near irrigation reservoirs, including the Nizam Sagar area.

The Minister made it clear that any revenue-generation model should not place an additional burden on farmers. Officials were instructed to examine the legal and regulatory aspects of all proposed measures before finalising the financial model.

Uttam Kumar Reddy also directed officials to complete the pending statutory audits of irrigation corporations, including the 2022-23 financial year, at the earliest. Senior officials were asked to coordinate with the competent authorities for the appointment of auditors and resolve issues related to draft audit reports. He said the financial statements should accurately reflect the corporations' financial position and help them secure long-term, low-interest loans to replace the high-interest borrowings taken during the previous BRS government, thereby reducing the burden on the state exchequer.

Officials were instructed to engage financial experts to assist existing teams in preparing funding proposals, restructuring debt and strengthening the financial presentation of the corporations.

The meeting noted that some irrigation corporations are paying average interest rates of around 11 percent on outstanding loans. By restructuring these loans at lower rates, substantial savings could be achieved. An indicative reduction in interest rates from around 11.4 percent to nearly 8.4 percent could save the government approximately Rs 250 crore annually, subject to verification of the loan portfolio and applicable terms.

The Minister sought detailed financial statements for every irrigation project, including outstanding principal, interest rate, annual repayment commitments, interest paid, loan maturity dates, physical progress, funds required for completion and the estimated timeline for finishing the remaining work.

He directed officials to prioritise projects nearing completion that require relatively smaller investments instead of initially allocating large sums to projects with substantial pending work. Completing such projects quickly would deliver immediate irrigation benefits, improve the financial performance of the corporations and enhance their ability to raise funds. Projects will be ranked based on physical progress, outstanding debt, funding requirements and completion timelines.

The meeting also discussed raising fresh resources through a corporation that has no legacy debt, repayment backlogs or weak financial history. Such a corporation could secure a new credit rating based on government backing and the proposed revenue-generation model. If successful, the model could later be replicated across other irrigation corporations.

The Irrigation Department was also directed to prepare a complete inventory of its assets, including property locations, ownership status and commercial potential, within 15 days. Officials were asked to maintain an updated project and asset database and ensure daily monitoring of the exercise.

Pending payments relating to irrigation works, land acquisition and administrative approvals also came up for discussion. Officials reviewed funds already transferred to district collectors for compensation to land-losing farmers and stressed that the payments should reach beneficiaries without further delay.

The Minister instructed officials to ensure that the proposed financial model is practical, legally sound and capable of supporting both interest payments and repayment of principal. The comprehensive financial restructuring report will be reviewed at another high-level meeting after its completion.

Irrigation Secretary E. Sridhar, Engineer-in-Chief (General) Ramesh Babu, Joint Secretary Srinivas and other senior officials attended the meeting.