The failure of Uttar Pradesh to pay for the power purchased by it from Himachal is adding to the woes of the fund-starved state. The government had supplied almost its entire surplus power during the summer to Uttar Pradesh Power Corporation Limited (UPPCL), which offered the highest rate of Rs 4.30 per unit when the power market was on the decline. In fact, the state heaved a sigh of relief as the market rate hovered between Rs 2.50 and Rs 3 per unit. It purchased 200 MW in April, 400 MW in May and June and from July onwards the quantum has been increased to 623 MW.

However, the state did not expect the UPPCL to falter in making payments. It has not made any payment sine June to the Power Trading Corporation (PTC) through which power is sold by the state. The PTC continued to pay the state from its own resources till August 15. It also stopped making payments as the Assembly poll is on the anvil in Uttar Pradesh and the prospects of early clearance of dues have dimmed.

In all, an amount of about Rs 200 crore has been held up, but the UPPCL owes much more to the PTC. A redeeming feature is that the PTC is a public undertaking and as such the state will eventually get the dues. However, the delay will cost it dearly as its financial position is already tight. Only two days ago, an officer-level meeting was held to sort out the matter but not much headway was made.

Another meeting will be convened later this month for the purpose which means that the state may not get the dues within this financial year. The agreement for sale provides for a 2 per cent rebate if the payment is made within a week and a surcharge of 3 per cent per annum if the payment is delayed beyond 30 days.

Power is one of the major sources of revenue for the state but of late it has been facing problems as most of the electricity boards in the country are in bad shape. They have no funds to purchase power and are opting for power cuts even though adequate power is available at reasonable rates. The only exceptions are the states where the Assembly elections are due. Uttar Pradesh purchased power only because it was an election year but it is not making payment.

On the other hand the state electricity board is facing problem due to refusal of Haryana to supply power during winter under the contra-banking arrangement like the previous years. The board is, thus, facing a shortage of about 10 to 12 lakh units per day and it has no option but to scout for power in the market.

This Article is taken from The Tribune online edition