Power Discoms are plagued by several problems and privatization is often regarded as a solution to the existing problems. Critically examine.

Electricity is the engine of our economic growth. Basically there are three types of companies associated with electricity infrastructure.

  • Gencos – Power generation companies. E.g. NTPC, NHPC, Reliance power, etc.
  • Transcos – Responsible for transmission of power from generation point to distribution point. E.g. PGCIL
  • Discoms – Responsible for distribution of electricity to end user. E.g. WBSEDCL, Kanpur Vidyut Company Limited, BSES Rajdhani Power Limited, Torrent Power Limited, etc.

Thus, Discoms are the last leg of the electricity infrastructure in our country.

Yet, they are plagued with several challenges:

  • Siphonage of electricity by population & weak fines and enforcement mechanism.
  • Power tariffs kept deliberately low for farmers welfare, which affects the profitability of Discoms.
  • Operation in less dense areas on government directions has led to reduced profitability.
  • Old infrastructure & lack of capital availability to invest in new infrastructure.

How privatization can help Discoms:

  • Increased efficiency.
  • More company friendly policies may increase investment in power sector.
  • Government fiscal deficit will reduce.

How privatization is not the solution:

  • Price of electricity will increase drastically.
  • May affect national development and inclusive growth.
  • Government launched UDAY scheme to help stressed discoms, so results are expected soon.

Way Forward:

Thus, instead of focusing on privatization, new solutions such as ‘smart-metering’ & ‘net-metering’ should be adopted. It will also help to achieve SDG 7 of clean and affordable power.

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