Privatization of power sector: J&K Govt has commissioned study

Privatization of power sector: J&K Govt has commissioned study
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Srinagar, Aug 5: After central government has decided to privatize power sector of Union Territories, Jammu & Kashmir has commissioned a study to assess suitable options regarding privatisation of power distribution, union minister of power and new & renewable energy R K Singh said on Thursday.

In a written reply to a question in Lower House of Parliament, the minister said, decision to privatise the power distribution in the States lies with the concerned State Government.

Government of India announced privatisation of Power Departments & Utilities in Union Territories (UTs) under Aatma Nirbhar Bharat Abhiyaan, he said.

“The decision is guided by sub-optimal performance of power distribution utilities and the objective of providing better services to consumers with improvement in operational and financial efficiencies,” he said, adding, “As per the decision of the Government of India, various UTs have undertaken steps for privatization of their electricity distribution for which Ministry of Power has provided transaction advisory support.”

Regarding the status, he said UT of Chandigarh has received bids. The UTs of Dadra, Nagar Haveli (DNH) & Daman Diu (DD) have also received bids and bids have been evaluated, he said. The UTs of A&N Islands and Lakshadweep are at Request for Proposal (RFP) finalization Stage. The Government of UT of Puducherry is currently at the RFP finalisation stage, he said.

“The UT of Jammu & Kashmir has commissioned a study to assess suitable options in this direction,” the minister added.

An engineers' body here has said that the move would burden consumers as the rate per unit will go up to Rs 8 from the current Rs 2 to 3.

The Jammu and Kashmir Electrical Engineer Graduates' Union (JKEEGA) in collaboration with a national-level engineers' body has come up with a report analysing the cost of energy post-privatization of DISCOMS.

According to the report, the tariff after privatization would witness a 200 percent hike as the per unit cost for the consumer would be up to Rs 8.

The central government recently decided to privatize the power sector in all the union territories of the country. As Jammu and Kashmir has been downgraded to a union territory following abrogation of its special status, the privatization as per the government's plan will be effected here too.

"After J&K's re-organization and its division into two UTs, the unbundling of the Power Development Department (PDD) was among the first steps taken by the central government. After unbundling the government has now decided to privatize the power sector which will have serious ramifications on our economy," said president, JKEEGA, Munshi Majid.

"The step will hit consumers and traders hard as the private players will increase tariff as per other UTs," he said.

The Centre announced in May 2020 that power departments and distribution utilities in Union Territories (UTs) will be privatised. Finance minister Nirmala Sitharaman had then said that the Centre hopes the privatisation of UT discoms will "provide a model for emulation by other utilities across the country".

The move has already evoked opposition from the All India Power Engineers' Federation (AIPEF) alleging that the centre is "misleading" the common consumers and farmers on the issue of the privatization of electricity distribution.

According to the report the grouping of UT of J&K in decision implementation vis-à-vis the rest of the Union Territories of India is nothing but "farce" as the population as per Census-2011 of UT of J&K is 3 times the entire populace of all the UTs of India taken together. (Population of UT of J&K: 122.67 lakhs; population of all the UTs combined together: 36.05 lakhs).

The consumer base of UT of J&K is more than double than that of the entire consumer base of all the UTs of India taken together. (Consumer base of UT of J&K is around 23 lakhs whereas the consumer base of all the UTs taken together is around 9 lakhs).

There is no comparison between UT of J&K and all the UTs taken together vis-à-vis the distribution network. Even the high powered Committee constituted by the Union ministry of power has not recommended the privatization of power sector in UT of J&K in the first instance, it said.

The Jammu & Kashmir Power Engineers and Employees Coordination Committee (JKPEECC) while opposing the move has threatened to launch agitation if the government goes ahead with privatization.

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