The Uttar Pradesh (UP) government is looking to privatize one of its five power distribution companies — Purvanchal Vidyut Vitran Nigam (PuVVNL).
This discom, which controls and manages the supply of electricity in the Eastern UP, covers two political cities-Varanasi (represented by Prime Minister Narendra Modi) and Gorakhpur (assembled by Chief Minister Yogi Adityanath).
Senior executives said the Power Department plans to privatize PuVNNL in order to reduce losses and boost supply infrastructure.
Varanasi was previously set to become a model city for urban power reform. This included underground wiring, smart metering, and information technology-enabled electricity supply, among others.
By the way, UP has the highest discom losses in the country — both financial and operational.
As of March, the total net loss of all five discomforts in the state was Rs 819 crore, according to the Ujjwal Discom Assurance Yojana (UDAY) portal.
The average national aggregate technical and commercial (AT&C) loss is 30 per cent – higher than the national average of 19.19 per cent.
Of the five, only two – the Kanpur Electricity Supply Company (KESCo) and the Meerut-based Paschimanchal Discom – are making a profit.
PuVVNL Managing Director K Balaji has refused to comment on the matter.
UP Power Corporation (UPPCL) Chairman Arvind Kumar did not revert to calls or messages. UPPCL is the nodal body for all discomfort, power generation and transmission in the state.
Currently, only Agra in UP has a private power distribution franchise run by Torrent Power.
In 2009, KESCo was offered by a franchisee model to Torrent Power. Torrent had to manage billing, connections, and even build additional infrastructure, while KESCo remained the owner. However, Torrent was never able to make any headway due to repeated protests by opposition parties and employee groups, and the deal was canceled in 2015.
In 2018, UP announced that it would offer a private distribution franchise to five cities, including the capital city of Lucknow and Varanasi. That, too, was not stripped off.
In contrast to the franchisee model, privatization of discoms involves the vesting of ownership of a business with a private player. The company will manage power purchases, build infrastructure, manage billing and collection, and meet the pre-determined loss reduction targets.
Delhi and Mumbai have privately-run discoms, of which two companies owned by BSES are on the block.
Odisha recently offered a four-circle power distribution license to Tata Power.
“The Centre is enabling reforms through the new draft electricity Bill and has been pushing states to join hands with private companies. UP wants to welcome investment in power distribution. PuVVNL is chosen due to its high losses; its turnaround will set a precedent,” said an executive.
According to the UDAY portal, PuVVNL has a financial loss of Rs 1500 crore as of March and AT&C loss of 37,9 per cent.
Sources, however, said that the UPPCL was not interested in the idea, while the state government was trying to get it through. It is known that UPPCL has raised questions about some of the principles of the current draft electricity bill.
“UPPCL has concerns regarding the franchisee model suggested in the Bill, as it overlaps with the existing functions of state discoms. It is against the idea of direct benefit transfer in electricity, fearing it will create more loopholes in electricity billing,” said an executive in the know.
In April, the Center announced plans for changes to the Electricity Bill 2003 and requested the States to submit their comments.
Andhra Pradesh and Telangana have already opposed the bill and have written to the Center to withdraw it. The UP government has yet to submit its comments.
The geographical area of PuVVNL includes the districts of Varanasi, Ghazipur, Chandauli, Jaunpur, Sant Rabidas Nagar, Mirzapur, Sonbhadra, Mau, Azamgarh, Ballia, Deoria, Kushi Nagar, Gorakhpur, Maharajganj, Sant Kabir Nagar, Basti, Sidharth Nagar, Allahabad, Pratapgarh, Fatehpur and Kaushambi.
