UPPCL cash gap swells to Rs 13000 crore in April-September period, dues to gencos at Rs 17,000 crore

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October 08, 2021 3:15 AM

“We have a cash gap of roughly Rs 1,500-2,000 crore every month. 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,” Devraj added.

Till September 20, against the non-government revenue collection target of Rs 4,912 crore for September, the total collections were Rs 2485 crore, merely 50.60% of the target.Till September 20, against the non-government revenue collection target of Rs 4,912 crore for September, the total collections were Rs 2485 crore, merely 50.60% of the target.

Despite continuous infusion of funds by way of loans from PFC-REC, power distribution companies (discoms) in Uttar Pradesh are in a precarious financial position, mainly due to inadequate revenue collection. The cumulative cash gap of the five discoms in the state from April to September has burgeoned to approximately Rs 13,000 crore, owing to which the Uttar Pradesh Power Corporation (UPPCL) is unable to make timely payments to generators supplying power to the state.

UPPCL’s cash gap for the first six months of 2020-21 was Rs 12,000 crore. Dues to generating companies, including state-run generators, have shot up to over Rs 17,000 crore. While the dues to CPSUs stand at Rs 2,200 crore, dues to independent power producers stand at Rs 6,000 crore and those to Uttar Pradesh Rajya Utpadan Nigam (state generating company) are at Rs 9,000 crore.

Speaking to FE, UPPCL chairman M Devraj said discoms have purchased electricity worth Rs 34,670 crore from April to September, while the revenue collection (from non-government consumers) has only been Rs 21,794 crore, which is just 63% of the power purchase cost.

“It is true that revenue collection has been falling short of the target. This is a matter of concern as the producers from whom electricity is being procured are not getting their payments on time. The MDs of all the power companies have been given strict instructions to increase the revenue collection by regular intensive monitoring so that the situation can improve,” he said.

Till September 20, against the non-government revenue collection target of Rs 4,912 crore for September, the total collections were Rs 2485 crore, merely 50.60% of the target.

Among the five discoms, while Kesco and Paschimanchal Vidyut Vitaran Company managed to collect 60.15% and 59.39% of their respective targets, Dakshinanchal Vidyut Vitaran Compnay and Madhyanchal Vidyut Vitaran Company collected only 43.26% and 43.34%. Purvanchal Vidyut Vitaran Company has proved to be the worst performer, collecting only 35.64% of its target.

In a letter to the managing directors of all five discoms, UPPCL managing director Pankaj Kumar reminded them that only recently, state-run power generating company NTPC had served a regulation notice to UPPCL due to delay in payment of power purchase dues. He said with the current revenue collections, UPPCL will not be able to meet the cost of power purchase, and asked them to closely monitor and review divisions that are grossly lagging behind the target on a daily basis.

NTPC had followed its notice to UPPCL by snapping 275 MW power from the state for not clearing dues that had been outstanding for more than 45 days. As a temporary relief, UPPCL had sought and received a loan of Rs 4,900 crore from the two state-run power sector lenders, Power Finance Corporation and REC, to clear the dues of NTPC and other generating companies that were pending for over 45 days.

“Delays in payment to generating companies in Uttar Pradesh is nothing new. But the regularity with which overdues have been piling up is worrying. It is mainly because the discoms are unable to collect revenue from consumers. Unless we earn revenue and are able to pay the gencos, we cannot be sustainable,” said an official, requesting anonymity.

UPPCL chairman Devraj said the discoms need to recover around Rs 5,000-5,500 crore revenue per month to become self-sustaining. “Our total expenses, including O&M, are around Rs 90,000 crore per annum. We roughly get around Rs 13,000 crore as government subsidy. Just the power purchase cost runs into Rs 70,000 crore per annum, while our revenue borders around Rs 45,000 crore, he said.

“We have a cash gap of roughly Rs 1,500-2,000 crore every month. 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,” Devraj added.

In the long term, the solution would be the pre-paid smart meter programme launched by the central government. “The central scheme will be a boon for Uttar Pradesh, as it will automatically take care of all the problems related to revenue collections,” he said.

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