History / Background

  • Since independence the State's power sector has grown at a rapid rate, contributing to the development of agricultural and industrial sectors in the state. The installed capacity available to the State has increased from about 264 MW in 1959 to about 5,886 MW in 1998. The transmission network has increased fifty-three folds during this period. The UPSEB today serves about seven million legitimate consumers, but there are many more who are not yet on the ledgers of UPSEB. During this period per capita power consumption has increased from 58 KWH to over 204 KWH (1994-95). As against this, the per capita consumption in States like AP, MP, Gujrat, Maharashtra the net average of the States, 319 KWH have been achieved during 1994-95.
  • The power sector has not been able to keep pace with the increase in power demand in the State. As against connected load of 13954 MW the installed capacity is only 5886 MW (8600 MW including the share in the Central sector units). Uttar Pradesh in currently facing an acute power shortage. Inspite of Energy Supply Managment, UP has a peak demand deficit of about of 15% while its energy shortage is about 8 percent. The power sector is faced with problems of low plant load factor in its thermal power stations (about 49%) very high transmission and distribution losses including non-technical losses, low voltage and frequent interruption. This has resulted in an adverse impact on the development and economy of the State and the welfare of the people. The State Government is very concerned about the continuing power shortage and the frequent power cuts imposed on electricity customers.
  • The root cause of the declining performance of the power sector is the lack of adequate investments to meet the sector's capital requirements and the deterioration in sector's efficiency. The primary reason for the lack of investment is the critical financial situation of UPSEB. As on 31st March, 1997, the accumulated commercial losses of UPSEB, excluding the State subsidies, were of the order of Rs. 7000 Crores, and cash liabilities of the order of Rs. 4200 Crores. UPSEB has not been able to meet its operational cash requirements because of high losses, poor Bill collections and unremunerative tariff for some category of consumers resulting in poor creditworthiness. The power sector has not been able to mobilise the resources required to finance the development activities. The continuing cash shortfall has also resulted in inefficient operations and in inadequate maintenance of the existing system. The State's Budgetary resources are extensively used to support the operations of the power sector, which could alternatively have been used for other social development activities.
  • As per the studies carried out, the State will need about 14,500 MW of additional generation capacity by the year 2011 to meet its power demand. Substantial investments will be required in transmission and distribution to supply this additional power and distribution to supply this additional power and rehabilitate the existing transmission and distribution system so as to reduce system losses and improve quality of power supply. The estimated investment required in the power sector e.g. for generation, transmission and distribution, by the year 2011 is about Rs. 69,000 crores. These huge requirements cannot be met without a massive mobilisation of resources, restoration of the creditworthiness of the power utilities, and the establishment of  a proper enabling environment. The State Government is determined to overcome the prevailing problems in the power sector and has decided to restructure & reform its power sector with ultimate aim of privatisation of generation and distribution areas.
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