Up Switches On Power Sector Reforms

The Kalyan Singh government in Uttar Pradesh is set to bring about sweeping changes in the states power sector by first inducting the private sector and then following it up with a restructuring of the Uttar Pradesh State Electricity Board (SEB).

An indication to the governments resolve to came from the appointments of UPSEB chairman G P Singh, who replaced Vireshwar Singh, and energy department secretary Shanker Agarwal. Both the officials are known for their pro-change stand. The two key appointments are believed to signal the governments resolve to remove bottlenecks in installation of naphtha-based power projects, the main terms of the power purchase agreements (PPA) for which have been settled. The remaining details will be worked out by the SEB and the respective independent power producers (IPPs).

Eight naphtha-based power projects have been planned in the state, seven of which are of 100 mw capacity and one of 350 mw capacity.

However, the Anpara project has been stalled due to competition between Mitsui and the SEB on the one hand, and Hyundai on the other. Hyundai is backed by the energy department and had signed a memorandum of understanding with the state government, tilting the stakes in its favour.

No wonder, this project was among the issues which were taken up first by the new UPSEB chairman. I have urged the government to take a decision and do it quickly, Singh said.

The issue of reorganisation of the SEB also awaits a decision. A World Bank report in 1993 had recommended a three-way division of the board. It suggested three independent companis for generation, transmission and distribution.

The energy department was recently considering combining generation and transmission and separating distribution from the board. But Singh is opposed to this as technically the three are separate functions and there was no point in combining them.

He said that there has to be a mix of private and public sector in the sector. We need massive investments and there is no other way out since the government is not in a position to invest, the UPSEB chairman said.

However, Singh plans to first tackle the shortage problem and raise revenue through an increase in generation. At present, the overall generation in the state is 2000-2100 mw. This can be increased to 2500 mw by reviving the closed units. The SEB buys 32 million units from the National Thermal Power Corporation at the rate of Rs 1.20 per unit and imports 36 million units, of which four mw is bought at Rs 2.30 per unit from other sources. The plant load factor is currently 45 per cent and the plan is to increase it to 52.8 per cent by January -February.

Transmission losses are as high as 50 per cent, with Meerut, Moradabad, Kanpur and Varanasi topping the list. Raids are to be organised to prevent thefts and the culprits are to be punished. I have already exhorted the staff to tackle this problem on a war footing and face it untidily, says Singh.

The SEB plan is to put electronic meters at junction points to monitor this and is planning to recruit more engineers for the purpose. The overall transmission and distribution losses are estimated at 22-23 per cent.