Lucknow, Nov. 10 -- Even as the Uttar Pradesh government is likely to formally announce concrete steps for the privatisation of the Agra and Varanasi power distribution companies (discoms) soon, the total debt of these entities stood at Rs 38,200 crore in 2024-25, which is about 56% of the Uttar Pradesh Power Corporation Ltd's total debt of nearly Rs 68,000 crore, according Uttar Pradesh Electricity Regulatory Commission sources. Out of the Rs 38,200 crore debt of the two discoms, the Agra discom accounts for Rs 16,400 crore and the Varanasi one Rs 21,800 crore, the sources added. According to the Power Finance Corporation's Unsustainable Debt Analysis, Uttar Pradesh's unsustainable debt is estimated at Rs 29,212 crore, 11% of its 2023-24 revenue receipts of Rs 2,62,634 crore. Out of this Rs 29,212 crore unsustainable debt, the Agra and Varanasi discoms account for about Rs 16,000 crore (54%), going by a calculation based on their share of the UPPCL's total debt. Currently, it appears Uttar Pradesh may be ready to go in for the Centre's proposed bailout package for loss-making state power distribution companies. Data from the Power Finance Corporation (PFC), as cited by the Group of Ministers (GoM) in its October 10 report accessed by Hindustan Times, shows that Uttar Pradesh carries the lowest share of unsustainable debt among major states. According to the PFC's Unsustainable Debt Analysis, Uttar Pradesh's unsustainable debt percentage of 11 is below Tamil Nadu's 76%, Rajasthan's 51%, and Andhra Pradesh's 49%. Tamil Nadu has the highest unsustainable debt burden at Rs 1,37,979 crore, followed by Rajasthan (Rs 58,513 crore) and Andhra Pradesh (Rs 50,851 crore). Explaining the privatisation push, SK Narang who completed his term as UPPCL director (Finance) only recently, said the corporation had done a lot of work to improve its operational and financial efficiency during the last three years because of which its debt burden was the lowest among six states. He, however, said, there was a need to privatise Agra and Varanasi discoms because their losses were the highest and hence were pulling the entire sector back. "Moreover, despite the low debt burden, UPPCL, as a whole, has to depend on government funds to meet its annual revenue requirement. In 2024-25 only, the state government had to provide Rs 46,000 cr to the UPPCL for this purpose and this keeps on growing every year. Such a huge funding from the state budget is unsustainable for any government," he said. "As far as the PFC's debt analysis is concerned, Uttar Pradesh discoms are certainly better off," said economist Ajit Kumar Singh, former director of the Lucknow-based Giri Institute of Development Studies. As per the GoM's calculations under the Relief Implications (SASCI) scenario, the Centre's proposed support through SASCI loans and state divestments would translate into Rs 4,475 crore in Government of India loans and Rs 17,900 crore in debt to be absorbed by the Uttar Pradesh government. Together, that makes up just about 5.7% of the total Rs 3.12 lakh crore debt load of all six states. The state's total discom debt stands at Rs 67,936 crore, with net fixed assets (NFA) of Rs 69,165 crore. Based on the sustainable debt threshold, 70% of NFA, UP's sustainable debt is Rs 48,415 crore, leaving Rs 29,212 crore as unsustainable. This means about 43% of the total discom debt cannot be serviced through normal operational revenue, necessitating restructuring. An unsustainable debt is one for which interest payments and principal repayment are not financially viable without additional borrowing, subsidies, or external assistance. Under the Centre's new reform-linked bailout, states have two options: either privatise a minimum of 51% equity in selected discoms with the state taking over the unsustainable debt and receiving a 50-year, zero-interest loan from the Centre, or opt for a smaller 26% divestment with man- agement transfer and interest subvention support for five years. "The scheme's intent is not just to bail out utilities but to fix structural flaws through professional management, tariff discipline, and accountability," a senior energy department official said. "For UP, which already has the lowest ratio of unsustainable debt, this could help avoid future financial stress." The Centre's latest bailout is proposed to be tied to strict compliance measures like annual tariff revisions linked to inflation, timely subsidy releases by the state government, and performance-based incentives. For his part, All-India Power Engineers Federation chairman Shailendra Dubey said, "We urge the chief minister to reject this conditional bailout."...