UP Power Sector: Plans Underway To Privatise Loss-Making Electricity Distribution Companies

Uttar Pradesh plans to privatise electricity distribution to address financial losses. Private sector participation will be introduced in high-loss regions, despite protests by employees.

UP Electricity Privatisation News: The Uttar Pradesh Power Corporation Limited (UPPCL) is preparing to privatise electricity distribution in the state, aiming to address the persistent financial losses faced by its power distribution companies. The decision was finalised during a high-level meeting held on Monday, which included UPPCL Chairman and the Managing Directors of the state's distribution companies.

Focus on High-Loss Areas

It was decided that private sector participation would be introduced in regions with major fiscal deficits. The objective is to revive the ailing power distribution companies, which are currently burdened with a cumulative loss of Rs 1.1 lakh crore. Discussions have already been initiated with two major industrial conglomerates in the country for this purpose.

New Model: 50-50 Partnership

Under the proposed privatisation model, a 50-50 partnership will be implemented. The chairmen of the distribution companies will be a government-appointed official, likely an IAS officer, while the managing director will be a private-sector appointee. The Odisha private sector model is being studied as a blueprint for this transition.

Pilot Privatization in Varanasi and Agra

According to a report in Hindustan, the privatisation process will begin with Purvanchal Vidyut Vitaran Nigam, Varanasi, and Dakshinanchal Vidyut Vitaran Nigam, Agra. High-level approval has already been granted, and there is pressure on the management of these companies to expedite the handover to private entities.

Financial Review and Agreement

During the Monday meeting in Lucknow, a financial review of the power distribution companies was conducted. UPPCL chairman and the managing directors of the distribution firms expressed their agreement with the privatization plan, which aims to improve efficiency and reduce losses through private-sector collaboration.

Engineers' Association Against Move

The UP State Electricity Council Engineers' Association said the PPP model of Odisha was a "complete failure" and called the privatisation move against the interests of both consumers as well as employees. The body also said that the management must first list the reasons for the losses and the steps taken to mitigate them.

It claimed that if the association is consulted in the making of an action plan to reduce the losses, the discom can recover soon, reported Hindustan.

(With inputs from Viresh Pandey, ABP News.)