Govt-run lender flags irrigation debt crisis: Telangana defaults on loans, faces NPA threat; must repay Rs 1.4k crore in 2 days
"This delay in servicing the dues has negative impact on the rating of the utilities and state as a whole," says a letter sent by REC's finance director, Jatin Kumar Nayak.
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The govt has been asked to clear dues of Rs 503 crore in the account linked to Telangana State Water Resources Infrastructure Development Corporation (TSWRIDC) before June 28. Another Rs 890 crore dues in the Kaleshwaram Irrigation Project Corporation Limited (KIPCL) account must be cleared by June 29.
The two special purpose vehicles (SPV) were floated by the previous BRS govt for taking up various irrigation projects, including Kaleshwaram, Palamuru-Ranga Reddy, Sitarama, Devadula, Sriram Sagar flood flow canal and Kanthanapally irrigation projects.
Nayak wrote to state irrigation secretary Rahul Bojja and finance department principal secretary Sandeep Kumar Sultania on June 6 with the details coming to light on Thursday.
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Dues over Rs 17k crore from Kaleshwaram corp ltd
The govt has dues of Rs 10,278 crore from State Water Resources Infrastructure Development Corporation Limited (TSWRIDCL) and Rs 17,232 crore from Kaleshwaram Irrigation Project Corporation Limited (KIPCL.)
Bojja told TOI that generally the finance department handles loan repayment. "The govt will resolve the issue," he insisted. In his letter, Nayak said the two loan accounts had already been categorised as special mention accounts (SMA-2) as both principal and interest amount had not been paid for over 68 days.
This means the loan repayment has not been made for over 60 days. SMA indicates that the account is at risk of becoming NPA after 90 days.
This is not the first time that the state has defaulted on payments. In Aug and Sept 2024, dues in the two accounts had collectively reached Rs 1,009 crore and were cleared after repeated reminders. REC in its letter to the state govt in Nov 2024, said, "Both KIPCL and TSWRIDCL have been consistently defaulting in debt servicing of REC loans despite multiple follow-ups with both the entities.
The utilities are clearing the overdue around 73 to 85 days from the due date which results in additional financial burden due to penal interests.
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At the same time, the state govt has been requesting the Centre to restructure its SPV loans. Chief minister Revanth Reddy in Dec last year urged Union finance minister Nirmala Sitharaman to restructure the debt of various corporations and SPVs as these were raised through off-budget borrowings.
He said KIPCL had raised Rs 31,795 crore from the Power Finance Corporation (PFC) and REC at interest rates of 10.75% to 11.25%.
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