Finance Minister Nirmala Sitharaman on Saturday said electricity distribution companies in Union Territories (UTs) will be privatised.
This is expected to provide a model to be replicated in states later to improve efficiency and attract investment.
Unveiling the fourth tranche of the Rs 20 lakh crore stimulus package to revive the coronavirus-hit economy, Sitharaman said there is sub-optimal performance of power distribution and supply in the country.
She said privatisation of discoms will lead to better service to consumers and improvement in operational and financial efficiency in power distribution.
This would serve as a model for emulation by other utilities across the country, she added.
Privatisation of distribution companies (discoms) has been under consideration of the power ministry
for quite some time. Earlier, discoms in Mumbai, Delhi and some other cities had been privatised.
Power Minister R K Singh had on Friday asked industry representatives to participate in the bidding process for discoms.
The minister also said a revised power tariff policy will be unveiled in the coming days which would focus on consumer rights, promotion of industry and sustainability of the power sector.
Under the revised policy, the discoms will not be allowed to pass on their inefficiencies and losses to consumers.
Discoms will also have to maintain certain service standards and would be penalised for load shedding, except in cases of natural calamities or technical failures.
The generation and transmission project developers would be selected through competitive bidding. It will also provide for direct benefit transfer of subsidies and installation of smart meters.
Singh had told industry representatives in a webinar that an informal group of ministers had approved the revised tariff policy which would be taken to the Union Cabinet for approval. He expressed hope that the policy would be rolled out within a month.