n Writes to striking workers, says no such plan on agenda
The Uttar Pradesh government has developed cold feet on privatising power discoms in the state. In a late night development on Tuesday, it gave in to the pressure by power workers demanding withdrawal of the decision to privatise the distribution sector in four cities and gave a written assurance that there was no such plan on its agenda.
The letter written by Sanjay Agarwal, principal secretary energy, to the upset power workers states that the government had merely invited bids from technical consultants.
“The technical advisor would merely gives its opinion on the move to private distribution sector in the state. The UP Power Corporation clarifies that the state government has not taken any decision on privatising distribution in the four cities (Ghaziabad, Meerut, Kanpur and Varanasi),” he said, adding that any decision to usher in power reforms would be done “only after taking the power employees and the engineers in the sector into confidence”.
The development might prove to be a major hurdle for UP government’s move on energy reforms as prescribed by the GOI in its financial restructuring package. The UP government had recently agreed to adhere to the FRP conditions by opening up discoms to private players in Gaziabad, Meerut, Kanpur and Varanasi.
The agitating workers under UP Power Employees Joint Action Committee threatened to go on an indefinite strike to protest UPPCL’s move to privatise power distribution system. Committee convenor Shailendra Dubey said the workers would go on strike from May 29 if the corporation did not withdraw its decision.
Questioning the move, power employees’ joint action committee’s Shailendra Dubey said it clearly suggests that the state wants to benefit private companies. ?According to figures made available by UPPCL itself, Ghaziabad’s revenue realisation is R4.54 and R4.38 per unit in different localities, while in Kanpur it is R3.30 per unit. Meerut has a revenue realisation of R3.13 per unit while Varanasi has a realisation of R2.66 per unit and R2.45 per unit in various localities.
As against this, the state’s average revenue realisation is R2.35 per unit. This means that all the cities that are being proposed to be privatised have a higher revenue realisation and are in profit. Giving profit-making cities for modernisation and strengthening shows that the move to privatise distribution is a sham.?
Dubey said that the state’s first tryst with power reforms and privatision in the distribution sector in Agra has already boomeranged, with the state accountant general report indicting last year that there was a huge scam behind the appointment of private sector power giant Torrent Power (TPL) as the distribution franchisee (DF) in Agra. The AG report had stated that the appointment has been done with utter disregard of the tendering procedure and has already caused a loss of R 489.89 crore to the state exchequer in the first two years since the Taj city was handed over to it in 2010.
The Centre had made it mandatory for all loss-making power discoms wanting to avail of the Centre’s financial restructuring package (FRP) to agree to some tough measures such as ushering in privatisation in the distribution sector, increasing tariff every year to bridge the gap between input cost and revenue realisation and bringing down ATC losses.
The UP government tried to rev up its ailing power sector by privatising the power distribution system. The privatisation was to be done under the public-private-partnership (PPP) model. The government had invited proposals for the selection of a technical consultant to prepare a feasability report for the project.
The need for restructuring in UP comes in the backdrop of mounting losses in the state’s power distribution utilities.
As on March 2012, the total dues were to the tune of R30,000 crore, which included bank loans of approximately R15,000 crore and an equal amount as outstanding power purchase liabilities. Under the public-private-partnership (PPP) model, the state government will set up infrastructure, the private company will take care of the power distribution and revenue realization.
The consultant will come out with a feasability report on the power situation in these four cities and suggest ways to renovate, strengthen and modernise it through PPP.
It will also invite the private companies to bid for these cities and oversee the handover process to the selected companies.
