Benefits of privatising discoms

The privatisation of the electricity distribution sector is back in the news.

- SOMIT DASGUPTA

The Uttar Pradesh (UP) government has announced that it plans to privatise two of its four public distribution utilities (discoms) and the Request for Proposal (RFP) documents are expected this month. This is the first big news on privatisation after Odisha's second phase of privatisation in 2020-21. Of course, we have had privatisation in Chandigarh, Daman & Diu, and Dadra & Nagar Haveli in the recent past, but they were relatively insignificant cases given the size of their distribution business. The two discoms which have been identified to be privatised—Dakshinanchal Vidyut Vitran Nigam Ltd. (DVVNL) and Purvanchal Vidyut Vitaran Nigam Limited (PUVVNL)—serve 42 of the 75 districts of UP. Together, they account for about 45% of the units sold in the state and about 4% of the electricity sold by all utilities put together pan-India. These two utilities have relatively higher loss levels amongst the four public utilities operating in the state.

We have really come a long way in the privatisation process since the Delhi Vidyut Board (DVB) was privatised in 2002-03. Here, ultimately, there were only two bidders in the fray, while three private utilities were planned. In UP's case, it is said that about eight bidders have shown interest which includes major players who are already running a distribution business—successfully, at that—in other parts of the country.