“Of the total (power) distribution in the country, only 4 per cent is through private sector suppliers. I don’t think why it should not go to 50 per cent in the next 10 years”
Pitching for privatisation in the power distribution sector, Planning Commission deputy chairman Montek Singh Ahluwalia on Friday suggested it can help in reducing huge losses and half of this business should be with private players.
“Of the total (power) distribution (sector) in the country, only 4 per cent is through private sector suppliers. I don’t think why it should not go to 50 per cent in the next 10 years,” Mr. Ahluwalia told reporters at a PHD Chamber workshop in New Delhi.
The power distribution sector is suffering due to huge losses of over Rs. 2,46,000 crore in the country.
Asked whether the privatisation can help ailing power distribution sector, he replied, “I believe so. I don’t see any reason, why we should not experiment.
“If we are happy to have transmission being done by private sector... generation 50 per cent private sector. There is no logical reason why distribution should not be done (by private sector) significantly.”
Elaborating further, he said: “The distribution sector is really the weak part. The financial health of the distribution segment is an indication that financial viability of the system as a whole and at the moment that is not viable because they are making huge losses...it is not sustainable.”
About restructuring plan for power distribution companies (discoms), he said: “It was an emergency response to very fundamental problem.”
“There was big success in expanding in generation capacity in the country. That was not extended to fuel supply for the sector. But that is now coming under control,” he added.
Mr. Ahluwalia also suggested that the States should separate rural power feeders as it would have spill over benefits for them.
About open access to power, he was of the view that there is no clarity on the issue as different people perceive it differently and thus, states should provide their view on it.
In his piece of advice, he prescribed, privatisation in distribution sector either directly or through the franchisee route by the state.