The Samajwadi Party government's decision to hand over distribution of power in four cities -- like Ghaziabad, Kanpur, Meerut and Varanasi -- to private companies by the end this year may not materialise after all. In fact, the government is likely to consider the process only after Lok Sabha elections, due early next year. Top sources in the energy department said that the state government did not want to stir another controversy after proposing a tariff hike, especially for domestic consumers. While the issue is still pending before the state power regulator, the state government is treading cautiously over the proposed privatization of power distribution in the four cities
Principal secretary (energy) Sanjay Agarwal confirmed that the feasibility study was yet to be completed for the privatization bid. The company that will do this is yet to be selected. The process may take another four to five months,'' he said while speaking to TOI. UP Power Corporation Limited (UPPCL) sources said that in any case the process might not be completed before the Lok Sabha elections which are extremely crucial for the Samajwadi Party.
The state government in September had invite consultants to review the power situation in the four cities, after which they were supposed to be handed over to selected private companies. However, the consultants could not qualify for the process,'' sources said.
Initiated during the Mayawati regime, the privatization is proposed to be done under the public-private-partnership (PPP) model wherein the state government will set up infrastructure while power distribution and revenue realization will be done by private companies. This is also one of the crucial clauses under the financial restructuring scheme of the Centre under which the state government seeks to avail funds to bail out the financially ailing power entity.
Sources said that the move to privatize power distribution in these four cities was now likely to coincide with the power tariff revision which is due in April next year. The revision will essentially affect the domestic consumers, whose electricity charges are likely to be raised by around 10% to 15%, according to the recent annual revenue requirement (ARR) report submitted by the UPPCL with the UP electricity regulatory commission (UPERC) earlier this month.
Not surprisingly, the proposed privatization bid brings under its radar the cities which tend to bring profitable business for the private companies. For instance, cities like Ghaziabad, come under the category of receiving more than 20 hours of power supply. The demand for power is also maximum here - 2,952MW per day - given existence of industries and vast corporate/commercial set up. This would not only help the UPPCL in better recovery but also benefit the private company as it would be able to gain a maximum profit,'' said a senior official in UPPCL on the condition of anonymity.
Meerut, like Ghaziabad, is also crucial for the state government given its proximity to the National Capital Region (NCR). This is also the area which has a high concentration of manufacturing industries and rolling mills which have high demand for electricity. Interestingly, it was only in October last year when the state government revised the power tariff for industries raising the electricity charges by around 50% to 60%.
Kanpur, too, has been under the scanner of the state government because of high rate of power theft and low revenue recovery from the industrial city. It was proposed to be handed over to private companies in 2010. However, the state government plans did not materialize thanks to the raging protest by power employee who threatened to go on a flash strike in protest. Power supply in the city has also been dwindling under the distribution. Varanasi too has been one of the cities which has been performing badly on revenue recovery front.