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Home News Power Sector News Franchisee raj - Kanpur power distribution to be handed over to torrent power

Franchisee raj - Kanpur power distribution to be handed over to torrent power

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Akhilesh YadavThe UP government has decided to hand over Kanpur's power distribution system to Torrent Power in a policy initiative by the Akhilesh Yadav-led state government that is being viewed to be on the lines of the one pursued by the Mayawati government. Torrent had bagged power distribution of Agra during the BSP regime. On April 19, UP chief secretary Javed Usmani had a meeting with officials of the Torrent Power and the energy department. According to the minutes of the meeting , the chief secretary asked the energy department to reassess the revenue recovery rates by May 10 before power distribution network of the industrial city is handed over to the company.

The Mayawati government, in May 2009, had signed a memorandum of understanding with Torrent under the franchisee system stipulating that the company will be responsible for distribution of power and realization of revenue in Agra. The decision was taken after revenue levels dipped alarmingly, essentially because of high power pilferage. In fact, the average recovery (technically called through-rate) had dipped to around Rs 1.90 per unit. But under an agreement, Torrent was supposed to recover revenue for the state government at the rate of Rs 2.02 per unit. Any further realization would have been company's profit.

The move had kicked off a protest by the power employees who tried to enhance their efforts and thwart the government move. This resulted in better performance in Kanpur. Within months, the revenue recovery went up forcing the government to have a rethink on the decision. According to Kanpur Electricity Supply Company (Kesco) officials, the city consumed 3,100 million units of power during 2011-12, for which around Rs 970 crores were realized. The incurred cost, including maintenance and salary expenses, was estimated to be around Rs 120 crore. Given this, the revenue recovery during the period was at an average of over Rs 2.70 per unit, which was much higher than what was agreed with Torrent.

It is according to this recovery rate that the agreement with Torrent will be reassessed. Sources said that the energy department is yet to take a final decision on the rate at which Torrent will be asked to distribute power. Undoubtedly, the state government will be under pressure to revise the agreement significantly.

The state government has also decided to examine if the company could be given an extension for setting up a 1,320 MW power plant in Sandila. The company had entered into an agreement with the state government in 2011 for setting up a thermal power plant through the MoU route. The company was supposed to get the project set up within 18 months. However, that does not appear to be happening even as the energy department reviews the project.

The chief secretary has asked the department to submit its report by May 5. Interestingly, this is quite similar to what JP did in case of 1,980 MW Bara thermal power plant in Allahabad which was allotted to it in 2009 by the Mayawati government. As per the contract, the plant was supposed to start generating electricity by 2013. But the developer in 2011 got the timeline extended till 2015. The same appears to happen with the proposed 1320 Mw power plant in Sandila.

Interestingly, chief minister Akhilesh Yadav, who also has the power portfolio, had said that the projects in which only 10% work has been done will be re-examined.

But at the same time, the state government has shown some strictness by asking the company to recover the arrears it was supposed to in case of Agra. According to the minutes, the company has not been serious in recovering arrears from the defaulters in Agra. Usmani has asked the energy department as well as Torrent Power to come up with a strategy within six months to expedite the recovery process.

Source - TOI


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