To usher in efficiency, the government is planning to privatise the electricity distribution companies (discoms) in Union Territories (UTs) by January 2021, sources said.
Efforts would also be made to privatise a number of discoms in major states such as Uttar Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Jharkhand and Assam to improve the governance of these state-run entities.
The Centre had announced in May that power departments and distribution utilities in Union Territories (UTs) will be privatised. Finance minister Nirmala Sitharaman had then said that the Centre hopes the privatisation of UT discoms will “provide a model for emulation by other utilities across the country”.
Among all the discoms which supply power in the UTs, the largest is located in Jammu and Kashmir, which owed Rs 5,443 crore to power generators as on March-end. The aggregate technical and commercial losses — an indicator of power pilferage — of the recently formed UT stands at 48% against the national average of 19%.
The Union government has been pushing discoms to increase private sector participation to achieve higher efficiency. As reported earlier by FE, the Prime Mnister’s Office had directed the power ministry to “dismantle inefficient and burdensome monopolies and encourage investments and participation of the private sector” in power distribution. Sources said that to achieve that target, joint ventures among CPSUs and private players are also being contemplated in the power distribution sector.
The government has already drawn up plans to allow multiple private franchisees in each area, while state-run utilities will continue to own the network. However, the model falls short of outright privatisation. In states where privatisation doesn’t seem feasible, commissioning of independent directors is being proposed to improve the corporate governance of discoms.
