UP power utility's cash gap target revised

Corporation may receive Rs 7,127 crore in 2004-05

The World Bank has revised the cash gap target for Uttar Pradesh Power Corporation Ltd (UPPCL), the electricity transmission arm of the UP government, from Rs 228 crore to Rs 273 crore for 2004-05.

The corporation is projected to gather Rs 7,127 crore, down from the earlier estimate of Rs 7,390 crore in 2004-05. The government will provide the Rs 1,055 crore subsidy.

The power purchase expenses are likely to be Rs 6,512 crore. Thus, the cash profit after power purchase and subsidy is Rs 1,671 crore.

But the administrative and salary expenses and debt service of Rs 1,944 crore will ensure that the cash gap of Rs 273 crore remains. Though corporation is unlikely to break even this year, as was earlier envisaged, its performance has improved, which is evident from the World Bank review.

For instance, the corporation bought energy worth Rs 41,838 crore in 2001-02. It came down to Rs 40,772 crore in 2003-04, registering a fall of 3 per cent. Revenue realisation in these two years increased from Rs 5,045 crore to Rs 6,075 crore, an increase of 20 per cent.

If inflation is taken at 5 per cent, even then, the increase due because of efficient operations is 15 per cent.

The demand for power also increased from 3,078 million unit in 2002-03 to around 3,300 million unit in 2003-04, an increase of 7.2 per cent compared to an increase of 2.2 per cent in Karnataka and a decrease of 2.6 per cent in Rajasthan.

The increase has mainly been in the Meerut division, where it went up from 1,460 million unit to 1,629 million unit, an increase of 11.6 per cent.

Collection performance too has shown an upward trend. Total billing in 2003-04 increased from 6,622 million unit to 7,074 million unit, registering an increase of 7 per cent. The overall efficiency improved from 80 per cent to 86 per cent.

The World Bank had sanctioned a $150 million loan in August 2000. Of which, $134.5 million has been disbursed and the completion of project date is set at December 2004 with the objective of augmentation of the transmission system, strengthening of the distribution system and improvement in the metering system.

Besides others, the loan was also to be used for setting up 1,450,000 electronic meters for system improvement and the modernisation of distribution zones, construction of 400 Kv, 220 Kv and 132 Kv sub-stations.

All the projects were estimated to cost Rs 975 crore. Of which, the World Bank's contribution has been Rs 736 crore and Rs 239 crore as the counterpart funding. Till April 2004, 1,136,417 meters were installed.

However, the corporation UP will not reach the stage of recovering operating costs.

Thus the new targets are aggressive realisation from retail consumers through handheld billing proposed to be undertaken in 15 more towns, rural franchisees to ensure at least 90 per cent collection from rural consumers, rationalisation of tariff, and lastly reduction in line losses through targeted enforcement measures.