April 9, 2013

After proposing a revision in power tariff, the state government is all set to privatize power distribution system in at least four major cities – Ghaziabad, Kanpur, Meerut and Varanasi. The privatization will 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 the private companies.

The move to privatize these four cities comes close on the heels of the UP Power Corporation Limited (UPPCL) submitting the annual revenue requirement (ARR) with the UPERC. The privatization of the said cities is also likely to coincide with the revision of power tariff set to come into effect by June. The revision essentially affects the domestic consumers, especially in Ghaziabad, where consumers will be required to shell out around Rs. 1.5 more than what they are paying at present.

The privatization of the said cities gains importance in view of the Rs. 15,000 crore power sector financial restructuring plan of the Centre wherein the state government is required to allow privatization of distribution companies. This is apart from tariff revision, which will have to be done every year.