Uttar Pradesh Power Corporation Limited (UPPCL) has raised Rs 3,951 crore through bonds maturing in 10 years at an interest rate of 9.7 per cent.
Official sources said the bonds, which were listed on Wednesday, saw a strong response from a diverse class of investors, including banks, mutual funds, non-banking financial companies (NBFCs), insurance companies and infra finance companies.
As many as 22 entities have invested in the bonds, including Credit Suisse, Barclays, Nippon, Aseem Infra, Star Health, Tipsons, Trust group, AK Capital, etc,” an official disclosed.
The Uttar Pradesh government has provided unconditional and irrevocable guarantee for all payment obligations of these bonds, which offer a coupon rate of 9.7 per cent.
According to sources, while the government had provided a guarantee to raise Rs 8,000 crore to tide over its operational expenses, it allowed the UPPCL to raise Rs 4,000 crore only. The proceeds are to be used for working capital requirements, the chief among them being clearing the dues of generation companies (gencos).
The UPPCL’s accumulated losses till 2020-21 were to the tune of Rs 70,454 crore, while its outstanding liabilities to gencos are around Rs 25,000 crore, out of which almost Rs 4,500 crore is due to the central generating and transmission companies, while another Rs 6,500 crore is due to independent power producers.
The public sector power utility is deeply in the red and its accumulated losses till the end of 2021-22 are close to Rs 1 lakh crore. The power utility is pressing for the tariff revision to tide over the distressed financial condition. The tariff was last raised in September 2019 and the request for further hike in tariff was turned down by the state government first due to outbreak of pandemic in March 2020 and later due to UP assembly elections.
The UP government has further aggravated the situation by promising to give free electricity to farmers, thus creating a fresh financial burden on the beleaguered PSU.
Sources said the power tariff would certainly be increased in the current fiscal 2022-23 which commenced on Friday.