UPPCL plans for restructuring discoms amid incurring losses of Rs 1.18 trillion in FY24

The Uttar Pradesh Power Corporation Limited (UPPCL) has proposed a restructuring of two of the state's five power distribution companies after all the discoms reported combined losses of ?1.18 trillion for the financial year 2023-24.

These losses involve five discoms operating under UPPCL: Madhyanchal Vidyut Vitaran Nigam Ltd (MVVNL) in Lucknow, Dakshinanchal Vidyut Vitran Nigam Limited (DVVNL) in Agra, Purvanchal Vidyut Vitaran Nigam Limited (PuVVNL) in Varanasi, Pashchimanchal Vidyut Vitran Nigam Limited (PVVNL) in Meerut, and Kanpur Electricity Supply Company (KESCO) in Kanpur.

Among these, PuVVNL recorded the highest accumulated losses, amounting to approximately Rs 35,000 crore.

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Under the proposed restructuring, PuVVNL will be trifurcated and DVVNL will be bifurcated into smaller discoms. UPPCL sources said the proposed entities will serve 3 to 3.5 million consumers each.

“The new discoms will operate under the public-private partnership (PPP) model, while the UPPCL will retain management and operational control,” a government official said. He denied allegations by government sector power employees that the proposal was akin to backdoor privatization.

“The restructuring will attract private investment in the UP power sector, spur competition, and preempt buildup of monopolies in the power distribution sector,” he noted. The proposed restructuring will focus on pockets with poor financial performance to increase revenue through better bill realisation and mitigating line losses. The reforms will improve service delivery and foster a competitive market for power distribution in UP.

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