Orissa and Haryana have decided to permit cross-holdings between distribution companies and generating companies for the first time. This forms part of the new blueprint for privatisation of the power sector in states.
Throughout the world, generating companies within a particular zone are not allowed to operate power distribution in that zone as they may show bias during operations.
The Haryana Electricity Regulatory Commission chairman V S Ailwadi said they would permit cross-holdings between the company promoting the Yamunanagar power project and the company promoting the northern distribution zone.
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He said although a distribution company was not allowed to invest in a generating company within the same zone, the state would not automatically disqualify any bid for the distribution zone if the company had also qualified for the generating company.
Ailwadi said, "We are open to the situation of the same company operating the generation and the distribution project and will not disqualify the bid." He said this would require "the parent company to prove that the two companies operating the generation and the distribution projects have no link whatsoever".
Under similar circumstances, in the Orissa distribution privatisation programme, the state government had earlier not awarded the central zone to AES, the American firm_which was also operating the Ib Valley power project in the state.