'Powerful' UP govt is top defaulter with Rs 100-bn power dues

Even as the Uttar Pradesh power utility is saddled with accumulated losses of over Rs 210 billion, the state government departments have emerged as the biggest power defaulters with total outstanding projected to touch Rs 107 billion this fiscal.

While the aggregate power bill realisation by UP Power Corporation Limited (UPPCL) stood at 87 per cent in September 2017, the ratio for the state government departments was much lower at 51 per cent.

UP energy minister Shrikant Sharma has conferred with Chief Minister Yogi Adityanath about the action plan to recoup the power dues from departments. The energy department is gearing up to realise dues in phases to bridge the yawning revenue-expenditure gap. The outstanding dues would be settled with the respective department’s annual budget, if need be.

In fact, UP has also topped the list of the state governments, whose departments owe massive power dues.

At the end of March 2017, while UP government departments owed Rs 88 billion in power dues, second-placed Telangana owed less than half of this amount at Rs 35 billion, followed by Maharashtra at Rs 33 billion. Next in the list are Andhra Pradesh (Rs 28 billion), Kerala (Rs 26 billion), Jammu & Kashmir (Rs 18 billion), Karnataka (Rs 18 billion) and Bihar (Rs 6 billion).

Sharma has also blamed the ‘apathetic’ attitude of the previous dispensations for the lacunae, which he asserted was now being plugged by the Adityanath government. Currently, the energy department has launched an extensive drive against 100,000 top defaulters to reduce the cash gap.

Cash gap refers to the time interval between the date when a company pays cash for the inventory and the date it receives cash from customers for the same inventory. Greater cash gap ultimately adds to the cost of the service provider or seller of goods and/or reduces profit.

UP State Power Consumers Forum president Avadhesh Kumar Verma said if the government departments settle power dues, it would not only improve the financial condition of UPPCL and the power distribution companies (discoms), but provide succour to the consumers as well in lower tariffs.

Under Ujwal Discom Assurance Yojana (UDAY), the Centre has mandated the state governments to substantially cut down on the power dues of their departments and agencies. It is a central scheme of the ruling National Democratic Alliance (NDA) government at the Centre for the financial restructuring of ailing discoms, which had collectively accumulated losses of Rs 3.6 trillion in the country.

In UP, UDAY was projected to accrue total savings of Rs 330 billion to state discoms and enable them raise fresh capital for future investment. After the injection of UDAY, UP discoms are still grappling with high accumulated losses and prospective losses going forward due to steep line losses, lower realisation and rampant power theft.