UPPCL moots restructuring discoms as power losses top Rs 1.18 trillion

The UP Power Corporation Limited (UPPCL) has proposed restructuring of the state's two of the five power distribution companies after all the discoms incurred losses of Rs 1.18 trillion in the financial year 2023-24.

 

The losses pertain to all the five discoms functioning under UPPCL- Madhyanchal Vidyut Vitaran Nigam Ltd (MVVNL) in Lucknow, Dakshinanchal Vidyut Vitran Nigam Limited (DVVNL) in Agra, Purvanchal Vidyut Vitaran Nigam Limited (PuVVNL) in Varanasi, Pashchimanchal Vidyut Vitran Nigam Limited (PVVNL) in Meerut, and Kanpur Electricity Supply Company (KESCO) in Kanpur.

 

PuVVNL accounted for the maximum accumulated losses among the subsidiaries at roughly Rs 35,000 crore.

 

Under the proposed restructuring, PuVVNL will be trifurcated and DVVNL will be bifurcated into smaller discoms. UPPCL sources said the proposed entities will serve 3 to 3.5 million consumers each.

 

“The new discoms will operate under the public-private partnership (PPP) model, while the UPPCL will retain management and operational control,” a government official said.

 

He denied allegations by government sector power employees that the proposal was akin to backdoor privatisation. “In fact, the restructuring will attract private investment in the UP power sector, spur competition and preempt buildup of monopolies in the power distribution sector,” he noted.

 

The proposed restructuring will focus on pockets with poor financial performance to increase revenue through better bill realisation and mitigating line losses.

 

The reforms will improve service delivery and foster a competitive market for power distribution in UP.

 

UPPCL has assured that the terms of salaries, pensions, promotions, and service would remain unchanged post restructuring. The employees will be given options to retain jobs, seek transfer to other discoms or opt for a voluntary retirement scheme (VRS).

 

Senior government officials will be appointed as chairpersons of the new discoms to protect the interests of employees, farmers, and consumers.

 

On the other hand, UP power consumers’ forum President Awadhesh Kumar Verma opposed the “privatisation” move, claiming such steps had borne dismal results in the past.

 

He suggested UPPCL could wipe out its entire accumulated losses by recovering outstanding bills which amount to Rs 1.15 trillion at present. He alleged the move was aimed at benefitting a handful of big private companies.