PATIALA: The Ministry of Power has warned Discoms in six states , Uttar Pradesh, Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu in a meeting held on October 10 that they would not receive financial assistance from the central government if they did not adopt privatization or other reform measures to reduce their losses and improve efficiency.
These states has been offered three choices, selling 51% equity of Discoms to private firms with the government bearing the debt, sell 26 % share to private company with full management control, or listing the Discoms on the stock exchange with at least an ‘A’ rating to qualify for financial aid from the Centre.
V K Gupta Media advisor All India Power Engineers Federation informed that the main reason behind these warnings is the growing losses and debt of the Discoms The total accumulated losses of the Discoms have increased due to problems such as political pressure to provide electricity at cheaper rates and the failure to pay government dues on time.
This advisory is part of the central government's comprehensive plan to reform discoms and promote private participation.
Shailender Dubey Chairman AIPEF said that this move is purely blackmailing the state Discoms and AIPEF would strongly oppose all such proposals. The federation also objected to the participation of the All India Discom Association (AIDA) in the meeting, alleging it serves as a conduit between private entities and the government.
Meanwhile, the Power Ministry has planned a bailout package for those power utilities who agree for privatisation or listing the utility at the stock exchange. The Ministry is considering a bailout exceeding 1 trillion rupees for debt-laden state-run power distribution companies.
The plan marks the government's toughest reform push yet to overhaul the chronically inefficient state-run electricity distribution companies. This is the fifth bailout package being proposed by the Ministry of Power.
V K Gupta informed that the power sector doesn’t need another bailout , it needs governance, discipline, and accountability. This bailout package will provide temporary financial relief but not structural reform needed.