FM puts power sector privatisation back in discourse

NEW DELHI: Finance minister Nirmala Sitharaman on Saturday announced that

electricity

distribution utilities or power departments in the

Union Territories

will be privatised for better service and efficiency, putting the issue of

privatisation

as a key element of power sector reforms back into public discourse.

Announcing the fourth instalment of measures as part of the Rs 20 lakh crore stimulus promised by the PM, Sitharaman also outlined the contours of the revised Tariff Policy, saying it will put consumers first by laying down standards of service and penalty on discoms in case of failure to meet those standards, ensure adequate supply and penalty for wilful blackouts by utilities.

The revised policy has been cleared by a group of ministers and is awaiting Cabinet nod. It will ensure a progressive reduction in cross-subsidies across the industry and rationalise tariffs. In order to ensure transparency, the government will pick generation and

transmission

project developers on a competitive basis

The objective, according to the FM, is to ensure that inefficiencies of discoms do not become a burden for consumers. The policy will have a provision in the tariff to cap transmission and distribution losses. Once the tariff policy is approved, the discoms would not be allowed to pass on these losses beyond 15%.

The policy would also encourage time-of-the-day tariff where the consumer would be charged more during peak hours. This would also enable consumers to reduce their electricity bill by doing household chores that require high power consumption such as ironing, running washing machine or operating water pump etc during non-peak hours.

The privatisation bid for UTs such as Chandigarh and Puducherry, with a largely urban setting, will be an attractive opportunity for the private sector to invest. But others such as J&K or Ladakh may not elicit the same response.

The Chandigarh administration has been trying to separate the distribution from its engineering department for almost a year. It has recently invited tenders for appointing advisors. The move, however, is being opposed by workers and engineers.

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