The government's announcement of privatising discoms in UTs will build confidence among larger states to take similar move, experts have said.
Unveiling the fourth tranche of the Rs 20 lakh crore stimulus package, the Finance Minister Nirmala Sitharaman on Saturday announced a slew of measures for the power sector, which included privatisation of power distribution companies (discoms) in UTs, a tariff policy, installation of smart meters, among others.
Sambitosh Mohapatra, Partner Power and Utilities, PwC India said "Power distribution in UTs to be privatised is an exciting step ahead. It will assist in generating private sector appetite amongst Indian and international investors, various PPP models will be tested and it will also provide confidence to larger states and utilities to undertake privatisation based on improvements achieved here".
Imaan Javan, Director, Suntuity Renewable Energy India, said the measures will benefit consumers directly. The standard of service will now have to be maintained by discoms or they will face penalty.
"Smart prepaid meters will allow transparency for consumers and also help DISCOMs reduce AT&C losses and ensures billing accuracy which leaves no scope for human errors. These measures should be implemented at the earliest," Javan said.
Rajesh Ivaturi, Partner Power & Utilities sector, EY India, said, "The Direct Benefit Transfer (DBT) of subsidies to consumers by the state government would relieve some of the financial burden on the DISCOMs and privatisation of distribution sector would bring in significant efficiency gains, the states too must take a cue and extend this to all key metros so that the quality of power supply goes up significantly".
Sumant Sinha, CMD, ReNew Power said that the government has taken another step on the path of distribution reforms by indicating early implementation of the National Tariff Policy.
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"Announcement of starting the privatisation process for discoms (in UTs) has come just days after the announcement of the Rs 90,000 crore fund infusion into discoms. These are some of the most far reaching reforms, the sector is witnessing," he said.
Karthik Ganesan, Research Fellow, Council on Energy Environment and Water (CEEW) said the proposed privatisation of distribution in UTs is certainly a welcome move.
"Privatisation in Delhi has brought about a great deal of improvement in operational metrics of the discoms in the city-state. However, the privatisation model will offer little for large states by way of learning, primarily because the ability of private actors to manage the diverse consumer base in large states is not proven," he said.