Wednesday, October 28, 2020


SBD is not to reform the power sector but to privatize - AIPEF 

VINOD GUPTA | October 09, 2020 05:12 PM

CHANDIGARH: The intention of the Ministry of Power in rushing through Standard BidDocuments (SBD)  is not to reform the power sector but to thurst privatization of the power sector across the country,
said V K Gupta spokesperson All India Power Engineers Federation (AIPEF).
AIPEF in its submission of comments  has written that 
 before considering the SBD proposal, the fundamental issue of privatization
 of Disocms itself is not agreed to since it is the prerogative of the respective
 state govt. It  appears that the central government  has taken the decision regarding
 privatization of distribution utilities across the country.
AIPEF has also included the comments of EAS Sarma's former power secretary on SBD  in its reply. Sarma has  mentioned that power distribution network is of strategic importance and it will  be prudent to screen the foreign investors before allowing them to bid
directly or through sponsored bidders.
 Rental for the land at a nominal rate in PBD  implies an invisible subsidy to the private company. This means an incremental hidden
profit to the private player, which needs to be quantified.
While the employees are guaranteed the same service benefits as on the
date of transfer to the private company, the prospective statutory scenario remains somewhat uncertain in view of the adoption of extensive revisions in the labour laws.
Densely populated urban clusters are the ones that generate revenues for the discoms who in turn deploy the same for cross-subsidization of consumer groups in sparsely populated areas where the unit cost exceeds the unit revenue.
 By transferring such revenue-rich clusters to private players with 100%
an equity share, the govt will hurt the interests of the discoms.
Further AT&C losses are not a reliable parameter for bidding.
The bidding format should encourage the private player to make optimal
 investments to reduce technical losses and improve the quality of the power supplied.

AIPEF maintains that already the Discoms are under financial stress and the tariffs are still having a gap between the average cost of supply and average revenue. In this scenario, for profit seekers to operate will not solve the financial crunch but rather deteriorate it.
This is not true that the economic contraction of 23.9% was not in any way caused by powered by the distribution sector. On the other hand, power discoms were themselves victims of the economy slow down.
Section 63 of the electricity Act 2003  does not extend to the evaluation of distribution utility or its bidding/determination.
Most discoms do not have/have not maintained a fixed asset register.


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