In the fourth tranche of the economic stimulus package, Finance Minister Nirmala Sitharaman announced several significant power sector reforms. The latest announcement comes on the heels of the announcement made earlier by the Finance Ministry that said that power distribution companies (DISCOMs) would receive ₹900 billion (~$12.03 billion) to recover from the financial rut caused by the ongoing coronavirus crisis.
The center has now proposed to privatize DISCOMs in the union territories (UTs). DISCOMs in the union territories come under the administration of the central government while the respective state governments govern those in the states. The UTs include Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, and Daman and Diu, Delhi, Jammu and Kashmir, Lakshadweep, Ladakh, and Puducherry.
“It will lead to better services for consumers and improvement in operational and financial efficiency in distribution,” Sitharaman said. Their financial incompetence has made attracting investments into the sector extremely challenging. Programs like UDAY that were announced to help the ailing DISCOMs also failed to fix the underlying problems.
Addressing the issue of DISCOMs recently, Raj Prabhu, CEO of Mercom Capital Group, had said, “DISCOMS are at the root of much that ails the Indian power sector. Unless privatization of DISCOMS is put on the table, chances of a turnaround in the energy sector are minimal.”Source : https://mercomindia.com/discoms-union-territories-privatized-new-tariff-policy/
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