Power engineers demand audit of privatised assets, impact on banks

Public-sector powermen have demanded performance audit of the privatised power assets in India and their adverse impact on the financial health of commercial banks.

Making a case against the alleged discreet privatisation of power utilities and channels, the All India Power Engineers Federation (AIPEF), representing nearly 1.5 million technocrats from the sector, today said an independent evaluation of the performance of privatised assets, their impact on consumers in terms of cost burden and customer service, and financial burden on banks was the need of hour.

AIPEF chairman Shailendra Dubey also criticised the alleged arm-twisting tactics of Union Minister of State for Power, R K Singh, who they claim had warned state power distribution companies (discoms) that they would have to hand over electricity supply business to multiple-supply licensees or franchisees in order to get central government assistance or loans from Power Finance Corporation (PFC).

Claiming that urban power distribution franchisees had met with a fiasco, Dubey noted since electricity was a concurrent subject, the Centre could not dictate terms to state governments. “Almost every franchisee, which had undertaken ‘creamy city areas’ has failed in different states, to deliver power to consumers and ultimately the state power discoms had to take their systems back.”

Recently, SNLD franchisee in Nagpur had expressed its inability to operate and asked Maharashtra discom to take over distribution. Franchisees in Aurangabad, Jalgaon, Gaya, Muzaffarpur, Bhagalpur, Gwalior, Sagar, Ujjain and Nagpur have also failed, Dubey claimed, adding in other places, franchisees regularly default in making payments to state power corporations.

“The power minister is talking of franchisee on one hand and on the other, the Government of India has formed a joint power distribution company consisting of NTPC and Power Grid, which have no past exposure to power distribution,” he underlined.

AIPEF had earlier also opposed the proposals of federal policy think tank Niti Aayog, which in its strategy paper, had dwelt on privatising power distribution in urban areas and introducing a franchisee system in rural areas.

Dubey had mentioned that Niti Aayog's strategy paper had essentially highlighted those points that were part of Electricity (Amendment) Bills 2014 and 2018. These bills lapsed after they could not be passed in Lok Sabha during the Narendra Modi-I regime.

In its paper, Niti Aayog had proposed privatisation of state discoms and/or the use of franchisee model to reduce AT&C (aggregate technical and commercial) losses in the domestic energy sector.

The Aayog had also said discoms could adopt a franchisee model for their retail business in rural areas and stipulate a minimum level of performance parameters,a including the use of decentralised generation sources and storage systems for local reliability and resilience. On its part, the Federation opined that ‘experiments’ of privatisation and franchisee models had failed in India.