Uttar Pradesh Power Corporation (UPPCL), the umbrella body of the state’s five electricity discoms, is set to issue bonds worth Rs 8,000 crore to meet its operational expenses. For the issue, which will hit the market in early March, it has appointed three merchant bankers, Trust Investment, Tipsons and AK Capital.
Delays in release of subsidies by the state government and the high aggregate technical and commercial losses (AT&C) losses — 27.5% in 2020-21 — have resulted in a rise in the discoms’ losses in 2020-21. A decline in rate of growth of revenue due to the pandemic in 2020-21 also caused the losses to rise, after a decline witnessed in the previous year (see chart).
Under the so-called UDAY scheme for discoms’ revival, a target was set to reduce AT&C losses (pilferage) to 15% by 2018-19. While many state discoms met the target, UPPCL was among the laggards.
According to official data, the UPPCL’s accumulated losses stood at Rs 70,454 crore in 2020-21. It had an outstanding working capital loan of Rs 66,277 crore and capex loan of Rs 11,105 crore in the year. Besides, it also owes Rs 26,419 crore as outstanding dues to power generators — Rs 4,684 crore to state-run firms and Rs 6,859 crore to IPPs.
A source in the UPPCL management told FE that the UP discoms’ losses in 2019-20 were Rs 12,892 crore, which rose to Rs 16,160 crore in 2020-21. “The power corporation’s total income from all sources stood at Rs 62,045 crore, including revenue collection of Rs 49,611 crore and subsidy support of Rs 11,465 crore, against which the expenses were Rs 78,205 core, thereby leaving a gaping loss of Rs 16,160 crore in a single year. The year before, the income was Rs 58,740 crore, while the expenses stood at Rs 71,632 crore,” he said, on condition of anonymity.
The power purchase cost of the five discoms in 2020-21 was Rs 62,770 crore, against which the revenue collection was Rs 49,611 crore, or 79%.
Speaking about the cashflow bottleneck, the official said the monthly cost to run UPPCL was Rs 6,517 crore. While the revenue collected (excluding subsidy) was Rs 4,098 crore, the monthly power purchase cost was Rs 5,231 crore, thereby resulting in an average monthly gap of Rs 2,419 crore, which translates to an average per day gap of Rs 80 crore without subsidy, and Rs 58 crore after subsidy.
“In a bid to improve things, we have appointed new billing agencies from November, who have been mandated to not just generate bills but also collect revenue. We have also managed to bring down the AT&C losses from 41% in FY17 to 27.5% in FY 21,” said an official, adding that in the long term, the solution to this problem would be the central government’s prepaid smart meter programme.
“The new central scheme for discoms aimed at revamp of the distribution systems will be a boon for Uttar Pradesh, as it will automatically take care of all the problems related to revenue collections. We also have plans to bring down the AT&C losses to 16% in the next three years,” he said.