Govt issues draft bidding guidelines for discom privatisation

By: |
September 23, 2020 8:29 AM

The Union power ministry on Tuesday released a draft of the standard bidding guidelines for the privatisation of discoms.

Land owned by the existing discoms shall be provided to the new owner on a right to use basis at nominal charges, the document stated.

The Union power ministry on Tuesday released a draft of the standard bidding guidelines for the privatisation of discoms. The Centre has been pushing state-run power distribution companies (discoms) to increase private sector participation to achieve higher efficiency. The guidelines are expected to provide a template format for all the states whenever they offer their discoms to private players through competitive bidding.

According to the draft, the highest bidder “shall be provided with a clean balance sheet, free of accumulated losses/unserviceable liabilities” of the discoms. It also proposed that existing assets of the distribution licensee, other than land, would be transferred to the highest bidder according to rates determined by state power regulators.

Land owned by the existing discoms shall be provided to the new owner on a right to use basis at nominal charges, the document stated. The provisions enlisted “are essentially being presented with an aim of initiating discussions and soliciting inputs from stakeholders on the standard bidding document,” the power ministry said.

The development takes place as the government plans to privatise the discoms in Union Territories (UTs) by January 2021. Efforts are also being made to privatise a number of discoms in states such as Uttar Pradesh, Madhya Pradesh, Jharkhand and Assam to improve their governance, sources said. To achieve the target, joint ventures among CPSUs and private players are also being contemplated in the power distribution sector.

The draft document proposed that existing power purchase agreements (PPAs) of the discoms will be transferred to the successor entities. However, for specific cases where PPA rates are very high, state/UT governments will retain PPAs to supply power to the new licensee at a lower cost. “Employees of the existing distribution licensee shall be transferred to the successor entity,” the document added.

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