Electrical Distribution System: Emphasis on more privatization in electricity distribution – mssewb.org

Kaushik Pradhan
Just before the presentation of the Union Budget, the Central Government has taken initial steps to further privatize India’s electricity distribution. For those power distribution companies which have no license period in the field of power distribution, the license period will expire by mid-June 2028. The power distribution company concerned has to apply to the Electricity Regulatory Commission for license renewal before June 2028. The Union Power Ministry on Thursday released a draft of the Electricity Amendment (Rules), 2023 under the Electricity Act, 2003 to introduce this system. The ministry has sought feedback on the draft within the next 30 days.

According to a section of India’s power sector experts, the Center is planning to privatize India’s power distribution sector in the same way that airports have been privatized and are being privatised.

An expert said, “The government has released the draft rules with the aim of completely opening up India’s power distribution sector to private companies. The country’s power distribution market will be completely open to the private sector from mid-June 2028. PPP model will come in widely. However, West Bengal and That will not be the case in Maharashtra. Because all the power distribution companies in these two states have licenses for 25 years each.”

In all states except West Bengal and Maharashtra, most power distribution companies have no license period. The license period is perpetual especially in case of State Electricity Board or State Government owned Electricity Distribution Corporation.

According to the expert, all state electricity boards were created under the Electricity Supply Act of 1948. Later in many states electricity boards were disbanded and electricity distribution companies owned by state governments were formed. He said, “But, historically, since electricity boards had no tenure of distribution licences, legacy state government-owned distribution companies also have perpetual licences. Which will no longer be the case once the proposed rules come into effect. The current electricity act came into effect in mid-2003. The license will have a term of 25 years.”

In West Bengal, however, CESC and West Bengal State Electricity Distribution Corporation also have a license period of 25 years. It was only in 2013 that the West Bengal Electricity Regulatory Commission included the issue of fixed term of electricity distribution license in the agreement.

The matter regarding the qualification of chairperson and members of the State Electricity Regulatory Commission is also covered in the draft rules. It has been said that, in order to sit on the post of Chairperson of the Commission, the concerned person should have experience of working at the highest position in any power generation or distribution or transmission company. If a government bureaucrat sits on the post of Chairman of the State Electricity Regulatory Commission, then it is mandatory to have work experience as Principal Secretary to the State Government or equivalent at the Centre. Several experts fear that the state electricity regulatory commissions may eventually run with a commercial outlook as the proposal paves the way for executives from private power companies as chairpersons of the commissions.

According to another expert on the draft law, “It is clear that the Center is unable to pass the new electricity bill in the parliament for the time being. The qualification of the chairperson and members of the State Electricity Regulatory Commission was in the new draft bill. The bill is now with the parliamentary committee. Bill “The Center is trying to insert things in the bill by amending the rules without passing them, which is not desirable.”

Leave a Comment