India will privatize electricity distribution companies (discoms) in all its union territories, and explore public-private partnerships for power distribution in some states, Union power minister Raj Kumar Singh said.
The centre has informed the Union territories about the decision, Singh said at a digital interaction with power sector chief executives. Unlike discoms in states governed by the respective state governments, the eight Union territories are directly administered by the central government.
“So as far as the Union territories are concerned, we have decided that we will put in place a distribution system which is based on totally open, transparent, competitive, commercial principles. So, you people are welcome to compete," Singh said at an event organised by lobby group Confederation of Indian Industry (CII). The move comes in the backdrop of the government on Wednesday announcing a reform-linked ₹ 90,000 crore bailout package for fund-starved discoms, along with concessional tariffs.
“We will be bidding them out for distribution companies to take up. And all the Union territories have been told that we will have distribution companies that are from the private sector," Singh added.
India’s electricity distribution reforms scheme — tentatively named Atal Distribution System Improvement Yojana (Aditya)— aims to cut electricity losses below 12%. India’s average aggregate technical and commercial loss are currently at 21.4%. The scheme aims to ensure continuous supply of power, by privatizing state-run discoms and negating tariff gaps. Prepaid smart meters will be made mandatory across the power distribution chain, including 250 million households.
Singh said the Union government will approach some other states for a public-private partnership (PPP) mode on the lines of Delhi or Odisha to bid out their distribution companies.
Odisha was the first state to privatize its power distribution sector into four discoms in 1999. This was followed by Delhi, which privatised three of its discoms in July 2002: BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Ltd (BYPL) and Tata Power Delhi Distribution Ltd. There is a growing interest in power discoms. Mint reported on 12 May about at least eight investors showing initial interest in buying Reliance Infrastructure Ltd’s Delhi power distribution businesses.