India to privatise discoms in Union Territories

Load shedding will be penalised.

The government of India is privatising distribution companies (discoms) in Union Territories (UTs) in a move to attract private investments in power distribution, it announced during the fourth tranche of economic package.

According to CARE Ratings, the government is working on a new tariff policy with provision for lifting the burden of discoms’ inefficiencies on consumers, as well as establishing standards for service and associated penalties for discoms and progressive reduction of cross subsidies.

With this, discoms must ensure adequate power and time bound grant of open access. Load shedding will also be penalised. In addition, generation and transmission project developers will be selected competitively.

The privatisation is expected to bring in efficiencies in distribution and reduce transmission and distribution losses, CARE Ratings commented.

“However as always, its effective implementation would be the key given that execution of various provisions of previous measures is still not being followed in letter and spirit,” they added.