Becoming the first Union Territory to offer its power distribution company for complete privatisation, Chandigarh has issued a tender inviting bids for the same. Privatisation of discoms was part of Centre’s Aatmnirbhar Bharat plan announced in May for economic revival.
The Electricity wing of engineering department of Union Territory of Chandigarh invited bids from interested entities meeting the qualification requirements, to participate in the competitive process for “selection of bidder for purchase of 100 per cent shares in Distribution Company responsible for distribution and retail supply of electricity and having distribution licence in the UT of Chandigarh.”
The cost of the ‘request for proposal’ (RFP) document is Rs 5 lakh and interested bidders would have to submit Rs 10 lakh bank guarantee as bid security amount, said the notice by the department.
The last date for purchase of RFP is December 23, 2020 and of bid submission is December 30, 2020.
Union finance minister Nirmala Sitharaman in May announced, power distribution business of Union Territories would be privatised. She said this could provide “a model for emulation by other utilities across the country” which will lead to better service to consumers and improvement in operational and financial efficiency in power distribution.
Delhi is the only Union territory which has private power discoms - run by Reliance Infrastructure’s BSES Limited and Tata Power Delhi Distribution Limited in separate areas. Union territories directly come under the Union government so privatisation is easier to do.
Barring Mumbai, Ahmedabad, Surat and Kolkata, no other city has private discoms. Against the average operational loss of 21 per cent of all state-owned power discoms, the losses of private discoms in these cities is in the range of 8-11 per cent. Odisha and Rajasthan have private distribution franchisees in select towns.
S N Sahai, secretary, union ministry of power in September said in a TV interview said the deadline for privatisation of Chandigarh & Andaman discoms is Dec 31 and that of Dadra and Nagar Haveli is January 2021.
In a first, the union ministry of power has drafted a ‘Standard Bidding Document’(SBD) for the privatisation of the state-owned power distribution companies. The SBD will be the guiding document for the state governments which would want to offer their discoms to private companies.
Power sector in India follows a federal structure wherein power distribution is a state subject and Centre has a guiding role. Power generation and transmission come under the Central government.
State-owned power discoms have been financially and operationally beleaguered for two decades now. There have been three reform schemes in the past to revive them but have failed to turnaround most of them.
The last discoms reform scheme UDAY, floated by the BJP government during its first term, concluded in FY20 with most of the states failing to meet their stipulated targets. The Aggregate Technical & Commercial (AT&C) losses or power supply loss due to inefficient systems was supposed to come down to 15 per cent and average cost-revenue (ACS-ARR) gap of discoms down to zero by FY20. However, AT&C loss currently stands at 23.9 per cent and the cost-revenue gap at 0.53 paisa, according to the UDAY portal. The numbers are the national average of last available data of all discoms of FY20 and indicative data of six states during Q1FY21.