Kochi: The power distribution sector in India is all set for privatization. The union ministry of power has
issued the guidelines for the same. The standard bidding document containing the detailed procedure
states to call for tenders and their schedules, for the privatization of the state-owned power distribution
companies have been prepared.
83 percent of the total assets in the power sector of states lies in distribution. Hence the move is expected
to be highly beneficial for private players. It is reported that Kerala will inform Centre of its stance on
discom privatization very soon.
Apart from Tripura the distribution vests with private companies in almost all states. In Tripura it is
under the state government. All other states have different companies for distribution, transmission
and production while in Kerala all these lies with a single company, Kerala State Electricity Board.
The new guideline by Centre also instructs states with no discoms, to identify SPV (special purpose
vehicle). As there is only one company in Kerala, an SPV will have to be formed. With this, the power
generation and transmission will fall under KSEB while the distribution will be with another company.
The assets under discoms, except land, are converted to shares. The land will be given on rent. The
share price will be decided on instruction from regulatory commissions. If the power loss in
transmission is 15 percent, the share price will be low in places where this is higher. As per
documents, the power loss in Kerala falls at 13.03 percent.
Also, the purchase contracts (for power bought from outside) of the states will be transferred to new
companies. They need to take it up only if the power price is lesser than at the time of entering the
contract.
Though the central government has issued guidelines, the decision can be taken by states. But it is
reported that the states which are not willing to privatise the discoms will be refused central funds and
power.
