Economy

COVID-19 stimulus: Discoms privatisation in UTs draws some flak

The government is using lockdown as an opportunity to push a bill, according to experts 

 
By Kundan Pandey
Last Updated: Saturday 16 May 2020
Source: Pxhere

The Union government’s move to privatise electricity distribution companies (discoms) in the eight Union Territories to ease economic adversity caused by the novel coronavirus disease (COVID-19) pandemic has attracted flak from experts.

Union Finance Minister Nirmala Sitharaman made the announcement as part of the Rs 20 lakh crore COVID-19 relief package.

According to the order, discoms will be privatised in Andaman and Nicobar Islands; Lakshdeep; Pudduchery; Daman and Diu; Dadra Nagar and Haveli; Chandigarh; Jammu and Kashmir; and Ladakh. Delhi already has a privatised power distribution sector. 

The Centre’s draft Electricity (Amendment) Bill, 2020, which emerged on April 17, 2020, raised several concerns over increasing centralisation and protecting private interests.

The Centre had earlier asked all stakeholders to provide comments on the draft of the bill within 21 days. After protests from several quarters, however, the government extended the deadline to submit all comments by June 5.

Experts claimed that the government was using lockdown as an opportunity to push a bill and give a deadline that no stakeholders, especially the states, would be able to adhere to in the middle of the healthcare crisis.

The bill has been rejected thrice since 2014. Experts said the government has not learnt any lesson from the past.

The Centre’s May 16 decision is aimed at privatising profit, which will lead to further losses in public sector public sector undertakings, according to Shailendra Dubey, president, All India Power Engineers Federation. This loss will eventually come to common consumers by way of tariff hike, he said.

Power distribution has been the weakest link of the sector and there has been growing demand to reform discoms.

But the recent bill proposes three major changes. It suggests ending present form of subsidy and cross-subsidy. Second, it allows private players in electricity distribution by way of sub-licensee and franchisee. Third, it creates Electricity Contract Enforcement Authority (ECEA). 

The move, however, has enthused private players.

“The last two decades of tepid results despite corporatisation and regulation have clearly indicated that state-owned enterprises have been unable to deliver efficiency, customer service and governance standards required from a modern power sector.  Private ownership should bring in greater efficiency and better governance and help address some of the deep-seated problems of the sector,” said Anish De of KPMG.

 Union Territories were a good place to start and should be introduced in state-owned discoms, he added.

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