Centre sweetens discom privatisation plans

New Delhi: The central government has sweetened the deal to privatise state-owned power distributions operations in Union Territories as 100 per cent equity holding will be sold only in financially viable utilities while it will retain 26 per cent stake in weaker discoms expected to have continued need for subsidised retail tariffs.

Also, the power purchase agreement (PPAs) of only better performing discoms having retail tariffs that cover the cost of power purchase will be assigned to the purchaser. Discoms making losses on sale on power will continue to be supported by the state-owned entity for a specified period even after equity transfer to a private entity.

"The draft standard bidding document finalised for privatisation of discoms in UTs has laid emphasis on giving a commercially attractive deal to investors. This is expected to attract better valuations for discoms," said a government official asking not to be named. The provisions in the draft bidding document means that privatisation of discoms in say, the UT of Jammu and Kashmir, will continue to have a role of state agencies to meet the subsidy needs of the consumers.