The Union power ministry has chalked out a revamp plan for the Delhi Vidyut Board (DVB) which includes separating its functions and divesting 51 to 74 per cent stake in the six distribution circles to private sector companies.
Emphasising urgency, the ministry's note suggests bypassing tenders and giving the lucrative south circle to the Bombay Suburban Electricity Supply, which it describes at various places as "reputed", "successful" and "with good experience". The private sector BSES currently handles power distribution in Bombay and was actively involved in the restructuring of Orissa power sector.
The proposal, prepared and sent at the behest of power minister PR Kumaramangalam, to the chief secretary and the principal secretary of the state government and to the Prime Minister's Office earlier this month, recommends unbundling the existing board into generation, transmission and six distribution circles.
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Apart from corporatising generation and transmission , each of the circles would not only be corporatised but also divested. The ministry argues that direct negotiations will be faster than an open tender. It argues that, with Delhi's power situation rapidly deteriorating, the privatisation process needs to be completed by the summer of 1999.
It suggests that negotiations should only be held with Indian companies, without citing reasons for excluding foreign firms.
By transferring the south Delhi circle to BSES, the ministry holds that the Delhi government will get a benchmark for dealing with distribution companies handling other circles.
For the transfer of assets, the ministry has recommended that either SBI's merchant banking division or any other Indian financial institution could evaluate the capital structure of the circles - which, it holds, "shall" be accepted by the distribution companies.
The employees of the DVB will directly become employees of one of the eight corporations under the Statutory Transfer Scheme, on an "as is where basis". Noting that legislation would be required, it suggests an ordinance, followed by an Act.
With DVB's annual losses touching Rs 1,000 crore, the high power tariffs of Rs 3.02 per unit and erratic supply, the ministry says that the Delhi government will have to adopt this measure, failing which, it warns, there will be widespread violence during the summer of 1999.
The ministry has asked the Delhi government to initiate structural changes as DVB on its own will not allow any change. The Delhi government has been asked to clear an Ordinance -structured on the same lines as the Orissa and the Haryana model after which the Presidential assent can be given.