In principle approval given for PVVNL privatisation

| | Lucknow
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In principle approval given for PVVNL privatisation

Saturday, 25 July 2020 | PNS | Lucknow

The Uttar Pradesh government has given in principle approval to privatise the Purvanchal Vidyut Vitran Nigam Limited, (PVVNL), one of the five power distribution companies (discoms) which are wholly owned subsidiaries of the UP Power Corporation Limited (UPPCL).

Purvanchal Vitran Nigam covers Prime Minister Narendra Modi’s Lok Sabha constituency Varanasi, and Gorakhpur, the home turf of Chief Minister Yogi Adityanath.

The government has also prepared broad terms and conditions which would be finalised once the model standard bidding document (SBD) is issued by the Union Ministry of Energy. At present, only Agra has a private power distribution franchisee run by Torrent Power.

National Electricity Supply Distribution Company Limited, a joint venture company floated by the PSU power generator NTPC and the Power Grid Corporation of India Limited, is said to be the front-runner to take over the PVVNL. The officials of this company were also present in the meeting held here on Thursday.

As per the presentation, power distribution of only six districts, Gorakhpur, Basti, Prayagraj, Mirzapur, Varanasi and Azamgarh, would be given to the new company. Power distribution in the rest of the districts of east UP will remain with the PVVNL.

The districts presently under PVVNL include Ghazipur, Chandauli, Jaunpur, Sant Ravidas Nagar, Varanasi, Mirzapur, Sonbhadra, Mau, Azamgarh, Ballia, Deoria, Kushinagar, Gorakhpur, Maharajganj, Sant Kabir Nagar, Basti, Siddharthnagar, Prayagraj, Pratapgarh, Fatehpur, and Kaushambi.

The PVVNL represents 23.60 per cent of the total electricity supplied by the UPPCL, 29.28 per cent of the total electricity consumers and 19.97 per cent of the total revenue of the UPPCL. Of over 83 lakh consumers in PVVNL, 84 per cent are rural consumers and 15.95 are urban consumers. The AT&C losses, or line losses, of the PVVNL stand at whopping 41.12 per cent. The average aggregate technical & commercial (AT&C) loss in Uttar Pradesh is 30 per cent, higher than the national average of 19.19 per cent.

According to official sources, the UPPCL is proposing to follow the model proposed by the Union Ministry of Energy. According to a senior official of the UPPCL, “As per the model proposed by the Union ministry, fixed assets will remain in the books of the  PSU discom  and the investor who will be given licence to operate the power distribution company for 25 years will pay charges for the electricity supplied by the power  grid.”

He added, “Cleaning of the consumer data base is under process and the target is to complete it within next 3-4 months.”

The UP government in its presentation also stated that the process of cleaning the bad debt was also under process. After the privatisation, a joint committee will be formed for writing off the unrecoverable and incentives would be paid to the bidder on recovery of old arrears. Additionally, the government also said that a mechanism needs to be worked out for the transfer of the existing employees and the contractual staff.

In 2009, KESCo was offered to Torrent Power through a franchisee model. Torrent was supposed to manage the billing, connections, and even build additional infrastructure, while KESCo remained the owner. However, Torrent could never make headway due to repeated protests by opposition parties and employee groups, and the deal was cancelled in 2015. In 2018, UP had announced it would offer five cities, including state capital Lucknow and Varanasi, to a private distribution franchisee. This, too, did not take off.

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