Plan to revive UP's ailing power sector

Reeling under heavy losses of power utilities, Uttar Pradesh government has chalked out a tentative business plan envisaging a total investment of about Rs 51,000 crore to provide electricity to all and turnaround the ailing sector by 2012.

The state government has estimated a total requirement of Rs 50,888 crore, including transitional funding of Rs 16,500 crore and investment support of over Rs 34,000 crore till 2011-12, by when it plans to reduce the aggregate technical and commercial (AT&C) losses to 23 per cent from 42 per cent at present.

"We have discussed the matter with the planning commission and they have asked for more details. We are likely to meet the commission again next month," Uttar Pradesh Principal Secretary (Power) Ashok Khurana said here.

Khurana, also chairman of Uttar Pradesh Power Corporation Ltd, said these were only broad estimates and would have to be reworked after consultations with various agencies such as the planning body and union power ministry.

According to central government estimates, the total commercial losses of power utilities in the state have risen from Rs 2,500 crore in 2001-02 to Rs 2,850 crore in 2003-04.

The state had the second highest commercial losses during 2003-04 in power sector after Gujarat, which posted losses of more than Rs 3,000 crore.

The state government has estimated an investment support of Rs 34,000 crore. This includes loans from banks and financial institutions to the tune of Rs 17,000 crore and a grant of Rs 7,000 crore from the union government. The remaining portion would be contributed by the state government, he said.

Khurana said the state would also required a transitional funding of about Rs 16,500 crore during the period. This includes state government subsidy and grant from the Centre.

An additional Rs 27,000 crore would be needed from private players to augment generation, transmission and distribution capacities in the next 7-8 years, he said.

Khurana said at present the cost of electricity supply in the state was Rs 3.93 per unit, much higher than the average tariff of Rs 2.66 per unit. The transitional funding is required till 2012, when the tariff and supply costs would be equal at Rs 3.78 per unit.

The state also plans to increase collection efficiency during the period from 85 per cent this year to 96 per cent during 2011-12, reduce AT&C losses to 23 per cent and cut transmission and distribution (T&D) losses to about 20 per cent from 32 per cent at present.

Khurana said the union power ministry has suggested that instead of one business plan for the whole state, there should be separate plans for different cities and regions. The ministry had said the critical distribution segment should be reformed first and given on a franchise-basis to achieve financial viability, he added.

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Power move

Govt plans to invest Rs 51,000 cr to provide electricity to all, to revive the sector by 2012

It will take Rs 17,000 cr as loans from banks, Rs 7,000 cr grant from the Centre and contribute the rest itself

Commercial losses of power utilities in the state rose from Rs 2,500 cr in 2001-02 to Rs 2,850 cr in 2003-04

Due to the on-line system, MTNL wil be able to bill long-distance