Uttar Pradesh Power Corporation likely to roll back its plans to privatise power distribution services in Kanpur

The Uttar Pradesh Power Corporation Limited (UPPCL) is likely to roll back its plans to privatise power distribution services in Kanpur. The implementation on its decision to handover the services to a private franchisee has already been delayed by a year. The UPPCL on Tuesday signed an agreement with power employees’ union according to which it will recommend to the state government the cancellation of its earlier agreement with Torrent Power Limited (TPL) done in May last year. The power company had invited union leaders for negotiations as they had given a call to go on two-day strike from July 22 against the privatisation of the services.

The CMD of the UPPCL, Navneet Sehgal, said, “A lot of factors are involved in the decision. Right now we are examining the data given by the employees’ union on improvement in revenue recovery and related issues.” Sehgal, who is also the Energy Secretary to the UP government, refused to comment when asked if the government intends to roll back the decision to privatise power distribution in Kanpur.Sources in the UPPCL indicated that if power distribution services are not handed over to the TPL this year, it will be difficult then to implement on the agreement. “The situation is very uncertain at the moment,” said a senior UPPCL official.The UPPCL in May 2009 had signed an MOU with the TPL for transfer of the power distribution services in Agra and Kanpur.

The power distribution services were handed over to the TPL in Agra on April 1 this year, after a delay of over eight months. Soon after this, the services, which are currently handled by the Kanpur Electricity Supply Company Ltd (Kesco), were expected to be handed over to the TPL. Earlier, the transfer of services to the TPL was planned to take place in Kanpur in October last year..The UP government, in December 2008, had decided to handover the power distribution services in nine cities of the state to private companies. The private parties had made bids for only two cities, Agra and Kanpur, and the TPL had won both the contracts.

In Agra, the move to power distribution to a private company has proved an immensely profitable deal for the UPPCL. In comparison to its monthly revenue of Rs 15-16 crore earlier, the company now gets about Rs 28 crore from the TPL.On the other hand, power employees’ leader Shailendra Dube said here that the UPPCL stands to lose if its hands over the distribution services in Kanpur to a private franchisee. “In 2009-10, the total revenue of the Kesco was Rs 739 crore. According to its deal with the TPL, it will get Rs 2 per unit. At this rate, the annual revenue of Kesco will be Rs 544 crore and that will mean the UPPCL will lose at least Rs 85 crore every year,” said the employee leader.