Fresh bid to privatise power distribution

Centre releases Draft Electricity Amendment Bill

- ARUNIMA BHARADWAJ

WITH LOSSES OF state-run electricity distribution companies (discoms) rising unabated despite a series of financial support schemes linked to regulatory targets over the last two decades, the Centre has proposed legal amendments to introduce competition and market discipline in the sector.

The power ministry has proposed to allow industries to directly procure electricity from private players, and remove the obligation on the discoms to supply to all consumers in their respective geographies. This means "open access" consumers - industries and businesses with consumption above 1 megawatt - may have to pay premium tariffs in the event of shortage, while supply will be uninterrupted.

The move is expected to improve the revenue flows of discoms, as it will help unlock substantial electricity demand from industries that can access affordable power directly. The proposed reforms will also reduce tariff distortions and support industrial expansion, the ministry said, while releasing the Draft Electricity Amendment Bill 2025. It has sought feedback on the Bill from stakeholders within 30 days.

According to the proposals, a distribution network will be opened to multiple private companies in the same area. At present, multiple licensees in the same area are required to maintain separate networks, leading to duplication of infrastructure and excess costs.