Budget 2020: Powermen red flag any 'privatisation' attempt by govt

The government power engineers have urged Narendra Modi government to take them into confidence on any legislation move aimed at ‘privatisation’ of electricity supply during the upcoming Union Budget Session of Parliament.

All India Power Engineers Federation (AIPEF), which represents 1.5 million public sector powermen, wrote to union power minister R K Singh expressing apprehension on Thursday. Their apprehensions were on the basis of newspaper reports, that the Centre had planned changes or amendments in the Electricity Act 2003 to introduce multiple supply licensee or franchisee by segregating carriage and content in present distribution system.

AIPEF chairman Shailendra Dubey told Business Standard the central government was planning to introduce privatisation in the power sector through the “backdoor” by simply tweaking the terms and conditions for financial grants to the state government regarding electricity supply. “This would not even require any amendment to the Act, yet introduce privatisation of the key components of electricity distribution to the end consumers.”

In its letter, the Federation has urged the union minister to give time for holding broad discussion before declaring any further amendments or changes in the Electricity Act 2003 to this effect. The Federation underlined that the financial stress in industry could not just be blamed on discoms alone, but there should be an independent and multidimensional analysis on the subject to fix the responsibility and take corrective measures.

The letter mentioned that according to the news reports, the Modi 2.0 government had proposed a grant of Rs 1.1 trillion for the various state electricity distribution companies (discoms) under a bailout scheme that would mandate discoms with high losses to either privatise operations or appoint distribution franchisees.

To be named as Atal Distribution System Improvement Yojana (ADITYA), the scheme is likely to be introduced in Union Budget, since the previous Ujwal Discom Assurance Yojna (UDAY) is expiring in March 2020.

ADITYA envisages infrastructure up-gradation, including implementation of smart metering at a total outlay of Rs 2.3 trillion, of which 15 per cent is proposed to be supported by the Centre and 10 per cent by the state with the central share of funding estimated at Rs 25,000 crore.

Besides, other proposals would require discoms to undergo institutional reforms in form of franchise to avail investment support, Dubey added. He said the new scheme envisages lowering aggregate technical and commercial (AT&C) losses of discoms to 12 per cent and eliminating gaps between their costs and revenue.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel