NEW DELHI: Finance Minister Nirmala Sitharaman’s announcement on Saturday that the Centre will privatise all power distribution companies in Union Territories (UT) has been welcomed by industry experts. However, aside from serving as a recent model for state governments to emulate, analysts note the move will have little immediate impact on the larger power distribution market. “This will lead to better service to consumers and improve operational and financial efficiency in distribution,” Sitharaman said in her presentation.
She also said that a new tariff policy focusing on improving consumer rights, promoting industry and ensuring the sustainability of the sector would be released soon. Power ministry officials have stated multiple times over the past few months that a new tariff policy was in the works and would be released soon. The privatisation of discoms is a policy that has long been mooted at the power ministry.
On Friday, May 15, Power Minister R K Singh had revealed the plan to privatise UT discoms and asked a group of power sector industrialists to par t i c i p ate in the bidding process during a CIIorganised event. Analysts have welcomed the general move towards privatisation, noting that state-run discoms have not delivered the efficiency, customer service and governance standards required from a modern power sector. Discoms in Odisha, Delhi and Mumbai have long been operating privately.
“Private ownership should bring in greater efficiency and better governance, and help address some deepseated problems,” noted Anish De, Partner and National Head, Energy and Natural Resources, KPMG in India. However, the real thrust for privatisation needs to come from the states. “Power being a concurrent subject in our federal set up, the Centre may set policy direction, (but) it is the states that will have to implement, including the decision to privatise,” said Debasish Mishra, Leader for Energy, Resources and Industrial at Deloitte. De agrees. “The UTs are a good place to start, though it should be propagated further into the state owned discoms,” he added.
Highlights A90,000 crore allocated to discoms as relief to pay power genco dues
2% market share of UT-based discoms
Private players more efficient
The privatisation of discoms is a policy that has long been mooted at the power ministry. Private ownership should bring in greater efficiency and address some deepseated
problems