UP discom, UPPCL asked to deposit Rs 7,245 crore to meet renewable purchase obligations

The Uttar Pradesh electricity regulator has asked state-run power utility Uttar Pradesh Power Corporation (UPPCL) to deposit Rs 7,244.7 crore in a regulatory fund by January 2022 to meet the renewable purchase obligations (RPO) for FY22 and clear the past dues. 

The amount to be deposited by UPPCL includes Rs 1,459 crore for not meeting its RPO targets till FY21, while the balance amount is towards meeting FY22 RPO obligations. This is for the first time the UP utility has been asked to pay the RPO funds in advance. The move is expected to provide payment assurance to solar, wind and hydel power producers supplying electricity to the state.

Uttar Pradesh’s ‘overdues’ — pending receivables of 45 days or more — to power producers stood at Rs 5,688 crore at FY21 end. In March, the regulator had directed UPPCL to route all payments to renewable power generators through the RPO regulatory fund to ensure these developers are paid on time. More than Rs 709 crore have already been paid to such developers in the first three months of the ongoing fiscal from the RPO fund.

Keeping in mind the liquidity flow of the discoms, the regulator has allowed UPPCL to deposit the fund in the account in 10 equal instalments between July 2021 and January 2022. The required amount is equivalent to about 10% of the state’s annual power purchase cost.

For the cumulative shortfall of RPO targets, the deposit amount has been calculated at Rs 1 per unit for the electricity not procured by the state discoms till FY21. For the FY22 consumption estimate, it is calculated at Rs 4.3 per unit which is the average power purchase cost of the UP discoms. 

Stating that much lower tariffs have been discovered in recent solar auctions in other states, UP has recently cancelled the auction for 184 megawatt (MW) of solar power plants conducted in February, 2020 where the tariff of Rs 3.17 a unit was discovered. 

Of the 40,000 MW of installed solar capacity in the country, Uttar Pradesh houses around 1,700 MW.

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