PCL’s OTS generates instant cash flow but losses remain

The Uttar Pradesh Power Corporation Ltd (UPPCL) appears to have devised one-time settlement scheme (OTS) as a tool to generate instant cashflow without making sincere efforts to recover power dues. The scheme is used nowhere else in the country.

The scheme that has raised the regulator’s eyebrows has often been found only causing revenue loss to UPPCL. It does not even benefit the targeted consumers in whose name it is launched as an annual ritual. Under OTS, consumers are not charged the interest/surcharge component incorporated in power bills provided they clear all their pending dues in one go. In its latest order, the UP Electricity Regulatory Commission (UPERC) observed, “The commission prima facie feels the licensee (UPPCL/discoms) loses revenue by repeatedly implementing OTS encouraging dishonest consumers not to pay bills in time.”

Sources said that under OTS, the UPPCL even covers dues only as old as one year. “Such schemes are brought only to recover the dues that are old and the possibility of recovery in normal manner is not possible due to various reasons, including litigations,” said an official. “What is happening is that the UPPCL brings this scheme as a routine for urban and rural consumers almost every year in the name of relief due to cold, rains, floods and drought, as a short-term measure to increase its cash-flow in that particular year.”

An analysis of the scheme shows that it has not benefitted the deserving consumers. It was found that last year, as much as 51.24 per cent of the total rebate under the rural OTS went to 35.87 per cent of the farmers owning private tube wells under the Meerut discom.

“It is common knowledge that private tube wells are generally owned by big farmers. In UP, 77 per cent farmers are marginal who can hardly afford a tube well,” said sources.

“The maximum benefit per person is going to big farmers only who often use their tube wells/pumping sets for commercial activity of selling water to marginal farmers,” they added.

This explains why the controversial scheme that the UPPCL has introduced this year without the regulator’s nod in the name of drought in the state also benefits rural domestic consumers and farmers in eight western UP districts that received normal or excess rainfall.

The UPERC is planning to invoke its penal powers against the UPPCL or complain to the governor and chief minister for announcing the OTS on February 12 without even replying to its queries.