UPPCL seeks state guarantee for 21,000-crore PFC-REC loan

The Uttar Pradesh Power Corporation has sought state government guarantees for loans of nearly Rs 21,000 crore to be borrowed from PFC-REC for payment of outstanding dues of central generating stations (CGS), independent power producers (IPPs) and renewable energy (RE) generators.

The Uttar Pradesh Power Corporation has sought state government guarantees for loans of nearly Rs 21,000 crore to be borrowed from PFC-REC for payment of outstanding dues of central generating stations (CGS), independent power producers (IPPs) and renewable energy (RE) generators. It has also sought subsidy support for debt servicing of this loan.

An action plan for FY21 to FY24 has been prepared and sent to the finance and law departments for vetting, after which it has to be approved by the state cabinet.

The UPPCL has promised to achieve key operational parameters, such as bringing down the AT&C losses to below 15% by 2024 and improving collection efficiencies. It also plans to install pre-paid smart metres for all consumers in the state, including all government connections. The UPPCL has also asked the government to ensure upfront and timely payment of subsidy and realisation of government dues for it to emerge out of the red.

Stating that as per the financial package announced by the Centre, outstanding government departments’ dues of nearly Rs 14,000 crores and outstanding subsidy of Rs 12,000 crores, as on March 2020, had to be liquidated in three annual installments. The UPPCL further said that henceforth 100% payment has to be ensured against the yearly billing to centralised and den-centralised government departments.

Seeking the state government’s support to make the discoms financially viable and eliminate the ACS-ARR gap by FY24, the UPPCL has said that an additional subsidy support should be provided by the state against the interest and repayment liability towards the fresh loans borrowed under this financial package. Apart from this, ‘an additional subsidy support of Rs 4,000 crore from FY22 will be required if rural supply hours are to be increased from the current 18-hours supply to 24 hours’.

Admitting that the recovery against government departments’ electricity bills has not been adequate, UPPCL stated that the dues have burgeoned to Rs 14,000 crore, as on March 2020, ‘which are the highest in comparison to other states’ and added that increasing revenue collection from rural, domestic and agri consumers is a major challenge.
It may be mentioned that almost 40% energy is supplied to rural consumers, where collection is difficult and domestic consumption accounts for 47% where the tariff is below the cost of service.

To add to the UPPCL’s woes, under the Saubhagya scheme, major increase was in rural consumer base, from where recovery has always been a challenge due to low turn-up.

Interestingly, the Uttar Pradesh government had recently decided to provide round-the-clock electricity to those rural areas where the aggregate technical and commercial (AT&C) losses are below 15%.

Energy minister Shrikant Sharma said this initiative needed public participation and appealed to village panchayats and villagers to cooperate with the government in reducing line losses to make their village self-reliant. He said the move comes on the back of the government’s vision of facilitating the setting up of village industries under its one-district, one product scheme for self-job creation.