The losses of public sector power utility Uttar Pradesh Power Corporation Limited (UPPCL) continue to mount even after over two decades of reforms in the power sector initiated in the year 2000.
The issue of UPPCL losses was taken up by the Lucknow bench of Allahabad High Court on Monday and the court had asked the Power Employees’ Joint Action Committee leaders as to why punitive fines should not be imposed on them for recovery of the losses due to the three-day token strike.
The then UP State Electricity Board was unbundled into three independent companies — power generation, transmission and power distribution — in January 2000. The accumulated losses of the distribution company, UPPCL, have soared to over Rs 1 lakh crore from Rs 77 crore in 2000.
If the total debt burden on the UPPCL and its wholly owned five power distribution subsidiary companies and the debt burden shared by the state government are included, the losses would be over Rs 2.5 lakh crore. The losses continue to mount even after two bailout packages given by the Centre in the last decade.
The first bailout package was formulated during the Manmohan Singh-led UPA government and called FRP (Financial Restructuring Plan) for the loss-making power distribution companies. Under FRP, the state government took over a certain share of debt liability on itself, thus clearing the balance sheet of UPPCL and enabling it to go for fresh borrowing from banks and other financial institutions.
The Narendra Modi-led NDA government brought another bailout package called UDAY (Ujjawala Discom Assurance Yojana) and the same procedure was repeated. The state government took over a certain share of UPPCL debility, thus enabling it to make fresh borrowings from the banks and other financial institutions. UPPCL also got over Rs 40,000 crore from the Centre for the ‘Power for All’ where over 50 lakh rural households were given free power connections under the ‘Saubhagya’ scheme. Besides the two bailout packages, the state government gives a hefty budgetary support or subsidy to UPPCL each year.
Moreover, UPPCL has also been the beneficiary of the concessional finance from the Power Finance Corporation, which was made available to it as part of the relief package announced by the Narendra Modi government in May 2020, after the imposition of the lockdown in March, to combat the first wave of the Covid-19 pandemic.
From this package, UPPCL cleared its dues to Coal India Limited, railways, NTPC and power purchased from independent power producers.
However, UPPCL has set a lofty target of reducing the difference between average cost of supply (ACS) and average revenue realised (ARR) to zero. The actual loss is little over 70 paisa per unit sold by UPPCL. In financial terms, the loss suffered is over Rs 80 crore per day.