UP power body announces waiver for defaulters

The loss-making UP Power Corporation Ltd (UPCCL) has announced a "one-time settlement" (OTS) scheme for recovery of dues outstanding.

Under the scheme, 50 per cent interest on the dues outstanding would be waived for domestic and commercial consumers "" both in urban and rural areas. However, there will be a cap of Rs 50,000 on the interest to be waived. The UP Electricity Regulatory Commission has given the power utility the go-ahead for the scheme.

Consumers owe as much as Rs 8,000 crore to the power utility. Domestic consumers account for over two-thirds of this amount. The UPPCL opted for the OTS for revenue recovery after coercive measures failed.

Recent revenue recovery drives launched by the UPPCL in urban centres like Agra, Varanasi, Gorakhpur, Bareilly and Moradabad were resisted by traders. In minority-dominated areas of Agra and Bareilly, engineers of the power utility had to beat a hasty retreat as the recovery drive led to mob violence and rioting.

The OTS scheme will be valid for all five discoms under the UPPCL, located at Meerut, Agra, Lucknow, Varanasi and the Kanpur Electricity Supply Company at Kanpur.

Though the scheme is valid till March 31, it is likely to be extended depending on the response from the defaulters and the revenue mopped up by the end of the fiscal year. Consumers interested in availing of the facility would have to register themselves by depositing Rs 1,000. The registration under OTS began on Friday.

Since its inception in January 2000, the UPPCL has been incurring an annual loss of over Rs 2,500 crore despite the huge subsidy given by the state government. The situation has been further aggravated by the populist decision of the present Socialist government in September 2003 to ensure power supply for 14 hours to rural areas. The recovery from the farm sector is less then 50 paisa a unit, while the cost of supply is close to Rs 4 a unit.

The "annual revenue requirement" statement, filed by the power utility before the power regulator, states that "UPPCL would incur a loss of Rs 2,400 crore in ensuring 14-hour power supply to rural areas, against which the state government has committed to provide subsidy of only Rs 1,242 crore".

The UPPCL incurred a bill of Rs 6,872 crore in 2003-04 in importing power. This shot up to Rs 8,306 crore in 2004-05. Last February, the UPPCL raised Rs 2,500 crore from the market for meeting its working capital requirements. The power utility raised Rs 1,000 crore from the banks while the remaining Rs 1,500 crore was given by the Power Finance Corporation against the guarantee of the state government.