Uttar Pradesh Power Sector Reform, APDRP & Business Plan

1. Uttar Pradesh Power Sector Reform, APDRP & Business Plan 25th Aug , 2003 A K Mishra CMD, Uttar Pradesh Power Corporation Limited

2. In this presentation … • Reform Milestones • Profile of Discoms • Business Plan • APDRP

3. Reform Milestones • UP Reform Act – 14th Jan 2000 • Electricity Regulatory Commission fully functional – 1st April 2001 (formation 10th Sept 1998) • UPSEB unbundled into UPRVNL, UPJVNL & UPPCL – 1st June 2001 • Further formation of four distribution companies – May 2003 • Recruitment of MDs by a competitive process for new DisComs – June 2003 • Functioning of DisComs as company – June 2003 • Implementation of transfer scheme – 12th August 2003

4. Reform Inertia • Inertia due to Size • Consumer base is one of the largest amongst most states • Employee strength one of the highest • Employee Inertia • Highest average salaries amongst all SEB successors • One of the highest average ages amongst all SEB successors • Inertia of Access • Electrification requirements are immense in terms of households and villages

5. Discom Structure & Profile….1 • Paschimanchal Vidyut Vitran Nigam • Meerut, Moradabad, Saharanpur, Noida • Consumers • Dom/Com-19.78 Lacs • L&H Ind – 2220 nos • S&M Ind – 33,000 nos • Billing – 67.33% • Collection – 85% Paschimanchal Madhyanchal • Madhyanchal Vidyut Vitran Nigam • Lucknow, Bareilly, Faizabad, LESA • Consumers • Dom/Com-18.94 Lacs • L&H Ind – 474 nos • S&M Ind – 26000 nos • Billing – 68.70% • Collection – 81%

6. Discom Structure & Profile….2 • Dakshinchal Vidyut Vitran Nigam • Agra, Jhansi, Kanpur • Consumers • Dom/Com-21.33 Lacs • L&H Ind – 429 nos • S&M Ind – 31,000 nos • Billing – 61.00% • Collection – 77% • Purvanchal Vidyut Vitan Nigam • Varanasi, Allahabad, Gorakhpur • Consumers • Dom/Com-14.24 Lacs • L&H Ind – 901 nos • S&M Ind – 33,000 nos • Billing – 71.20% • Collection – 78% Dakshinanchal Purvanchal

7. Business Plan • Provide clean Balance Sheets to the successor entities of UPSEB through extensive clean up, write offs and restructuring. • Ease cash outflows of the successor entities through reschedulement and restructuring of liabilities payable to lenders and suppliers as also retention of a large part of the past burden by GoUP. • Ensure stability in the revenue streams of the entities by defining a clear path for future GoUP support to be provided to each entity. • Enhance the commercial viability of the sector by clearly outlining the implementation plans for efficiency improvement and the commitment of GoUP and the successor entities for its implementation.

8. Business Plan Cont… • Reschedulement of Loans and Payables • GOUP has rescheduled the loans to LIC (Rs 17,800 million) and REC (Rs 14,000 million) with IRR of about 8%. • The power purchase payables to the CGS of Rs 60,850 million has been securitised as per the recommendations of the GoI Expert Group. • UPPCL issued bonds of Rs 992 cr to UPRVUNL to be serviced in the same way as in the recommendations of the Expert Group for Central PSUs. • Restructuring: • GOUP has written off in March 2003 about Rs 13,405 million of accumulated GOUP loans and interest thereon to UPPCL against arrears of GOUP departments and agencies that had accumulated since the unbundling of UPSEB. • The Pension and Gratuity liabilities of Rs 61,767 million had been retained by GoUP • GOUP has further retained the GPF liabilities of the employees amounting to about Rs 16350 million. • Cost Push • CERC Order on Tanda reduced the tariffs of Tanda considerably • CERC tariff notification for FY02-05 period would reduce the FC of NTPC stations by about Rs 120 cr every year from FY02 onwards

9. Business Plan Cont …

10. Business Plan Cont … Movement of cost of supply and revenue realized

11. Discom Business Plan Highlights • Meerut discom turns around the earliest on both revenue and cash terms • Varanasi discom subsidy requirement persists till FY09 • Uniform BST and retail tariff increases considered across discoms • Meerut discom accumulates significant cash surplus from FY05 onwards • Mechanism to plough out surpluses required Lucknow Discom Revenue T/a after subsidy: FY05 Revenue T/a before subsidy: FY08 FY03 distribution loss: 29% Collection efficiency: 81% Total subsidy support: Rs 7496 M Meerut Discom Revenue T/a after subsidy: FY04 Revenue T/a before subsidy: FY07 FY03 distribution loss: 33% Collection efficiency: 85% Total subsidy support: Rs 12562 M Kanpur Discom Revenue T/a after subsidy: FY05 Revenue T/a before subsidy: FY08 FY03 distribution loss: 39% Collection efficiency: 77% Total subsidy support: Rs 8094 M Varanasi Discom Revenue T/a after subsidy: FY05 Revenue T/a before subsidy:FY09 FY03 distribution loss: 31% Collection efficiency: 78% Total subsidy support: Rs 18212 M

12. Efficiency Improvement • Process Improvement and One time settlement • MRI based Billing for >100 BHP customers: • Process has been rolled out for 70 divisions and over 1900 consumers out of 4024 since July 2003. • Remaining divisions targeted to be completed by end of Dec’03 • MRI based Billing for >50 & <100 BHP customers: • There are around 4073 customer • MRI Billing will start from the month of Jan’04 • Electronic billing using Hand Held Machines • Process conception and roll out since July 2003, 1st Phase covered three zones : • LESA – 4 lakh, Ghaziabad – 1.2 Lakhs, Noida – 0.87 Lakh consumers

13. Efficiency Improvement … • Metering • 100% Metering of feeder • All 6805 nos, 11 kV feeders are metered • Complete Energy Accounting for 6 districts are in place to measure accurate input • Consumer Meter • As on July ’03, 4.50 million consumers are metered • Electronic Meter installed From July’02 to July’03 – 1,005,000 Nos • TOD Metering • All high value (HV2 category) consumer meters have been replaced with TOD meter • MRI based billing software for TOD meters has been developed • Billing will start from Sept’03

14. Efficiency Improvement Contd… • MIS • Features • Authenticity of Information at various levels of operation • Information driving commercial re-engineering • Automatic generation of Regulatory Information • Format and Flexibility of Information • Measuring Efficiency or Billing Methodologies • Targeting Consumer Behaviour • The MIS is built from a consumer level database and has immense flexibility of being queried in various ways • The outputs- Metering, Billing, Collection and Credit Control are actionable • The new MIS has been tested and implemented successfully in Agra Discom • Roll out of MIS planned in all Discoms by August end 2003

15. Efficiency Improvement Contd… • One Time Settlement • The Scheme • Registration charge is Rs 1000 only that is adjusted against the OTS. Once registered consumers can settle dues till 30th Oct 2003 • Surcharge payable on bills up to 31st March 2003 would be waived. This waiver shall not exceed 35% of total bill amount or actual surcharge if known. This will be subject to the condition that consumers will make up-to-date payments of their current bills. • Consumers whose arrear age is known would get 1.25% per month as waiver. This is subject to a maximum of 30% of total bill for arrears between 1-2 years and 15% for arrears below 1 year. • For electricity used after April 1, 2003 surcharge will be payable at normal rates. • If the amount of the corrected bills exceeds Rs.25 lakhs, consumers will be allowed to pay it into four equal monthly instalments by giving post dated cheques. Interest at 12% per annum will be payable on the last 3 instalments. • Already consumers with arrears aggregated over Rs 50 cr have registered for the OTS • Over Rs 14 cr has been collected. • Parallely over 5000 FIRs have been lodgedto put pressure for payment • Division is also empowered to implement the scheme

16. Accelerated Power Development Reforms Programme • Programme Details: Rs. in Crs • Towns covered under APDRP • Moradabad, Gorakhpur, Bareilly, Allahabad, Varanasi & Faizabad, Muzaffarnagar, Shahjahanpur, SCADA Lucknow

17. APDRP Cont… • Issues in Progress • APDRP schemes for Moradabad, Bareilly & Gorakhpur sanctioned on 20.8.2002 • The schemes were verified and revised during Oct-Dec’02 • Tender was invited in Jan’03 • The tender specification finalized in Feb’03 • These type of turnkey projects were new, so the venders asked for extensions to under stand the job involvement and to form consortium • Specifications also changed later to suit the field requirement • Specification for SCADA/DSM is awaited from PGCIL • Feeder wise energy accounting delayed due to delay in implementation of Indexing and Metering programme

18. Work Progress : APDRP

19. Work progress cont..

20. THANK YOU

21. Business Plan HighlightsVaranasi Discom

22. Business Plan HighlightsKanpur Discom

23. Business Plan HighlightsLucknow Discom

24. Business Plan HighlightsMeerut Discom