India sees privatization as answer to flailing state power firms

• India’s federal government will encourage inefficient state power utilities to seek privatization and other institutional reforms to turn around money-losing operations and ensure reliable supplies to consumers, according to the top bureaucrat in the federal power ministry.
• States with electricity utilities that lose more than 15% of revenue due to archaic networks, power theft and sloppy billing and collections would be pushed to seek private participation in their distribution network as part of the country’s planned second wave of power reforms, Power Secretary Sanjiv Nandan Sahai said in an interview in New Delhi.
• India has been increasingly advocating privatization of ailing distribution companies as government efforts since 2015 to revive the utilities failed to turn around the firms, known as discoms.
• These utilities lose money by selling power below costs, often delaying payments to generators and depriving customers of reliable and affordable electricity.
• The state governments will also need to do their part to ensure the companies can succeed, according to Sahai.
• The next wave of reforms, which are still in the works, will follow an earlier set unveiled in 2015, which sought to bring down revenue losses to an average 15% by Mar 19. While they did decline, they were still at 18% at the end of 2019, with many states showing much bigger deficits.

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