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Strategy to turn around losses! Power discoms to be privatised in UTs

Though most states are opposing privatisation of power sector, many cities such as Mumbai, Delhi and Kolkata and many towns have partially privatised power distribution

twitter-logoPB Jayakumar | May 20, 2020 | Updated 13:16 IST
Strategy to turn around losses! Power discoms to be privatised in UTs

Finance Minister Nirmala Sitharaman's announcement on Saturday as part of the Covid-19 stimulus package to privatise power distribution in all Union Territories (UT)s is part of the efforts to improve efficiencies in power distribution, reduce transmission losses and turnaround loss making distribution companies (discoms), say industry sources.

Union Power Minister RK Singh had yesterday told a meeting of power sector executives that the Union Territories have been informed of the Government's plan to privatise distribution, based on totally open, transparent, competitive and commercial principles. Further, the Government has also proposed a PPP model for some of the state run utilities.

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As part of the proposed new reforms in power sector, likely to be named Atal Distribution System Improvement Yojana (ADITYA), the unviable discoms have to try modernisation, reduce transmission and distribution losses and bring in new technologies like smart metres or go for privatisation by appointing licensees.

Power is in the concurrent list of the Constitution of India and States manage power distribution, where as in UTs, it is directly done by the Union Government.  States utilities are estimated to annually lose more than 15% of revenue, mainly due to old distribution infrastructure, power theft and billing and collection issues. India's average aggregate technical and commercial losses during power transmission are  over 21% and the Government wants to reduce this to 12%, which can make many distribution utilities viable. The Finance Minister on Wednesday had announced a Rs 90,000 crore package for discoms as part of the revival plan. Discoms cumulatively owe more than Rs 90,000 crore to generation companies.

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Though most states are opposing privatisation of power sector, many cities such as Mumbai, Delhi and Kolkata and many towns have partially privatised power distribution.

Since 2002, power distribution in Delhi is done by BSES Rajdhani Power (BRPL), BSES Yamuna Power (BYPL) and Tata Power Delhi Distribution. Tata Power and Adani Electricity Mumbai are electricity distributors in Mumbai, besides two State Government owned utilities. Torrent Power supplies power to Ahmadabad, Surat, Agra,  Bhiwandi and is among the first private companies in India to enter private power distribution. According to Torrent, its Bhiwandi T&D (transmission and distribution) loss is only 15.13% and in Agra it's 14.18%. A few months ago, Tata Power had bagged rights to supply power in five circles in Odisha, Bhubaneswar, Cuttack, Paradip, and Dhenkanal, for 25 years.

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