The draft standard bidding documents (SBDs) published by the Ministry of Power outlines the process for privatisation of state-owned distribution utilities. The SBDs consist of a guidance note, a draft request for proposal (RfP), draft shareholders/ share acquisition agreements, draft transfer scheme and a draft bulk supply agreement.

Prayas (Energy Group)’s comments on the SBDs highlights the need for a thorough examination of the performance of existing private utilities and past privatisation efforts to understand if change of ownership alone would result in improvement of quality of supply, reduction in AT&C losses and reasonable pricing of electricity. The experience in Delhi, Odisha and Mumbai would be particularly instructive in this regard.

Given the limitations of cost-plus regulation, it is unlikely that mere transfer of ownership would be sufficient to realise efficiency gains from the effort. As such, this would imply transition from ‘public monopoly’ to ‘private monopoly’. In this context, efforts to promote retail competition and monitoring of tariffs and supply and service quality for small consumers should be necessary pre-requisites before any privatisation efforts are undertaken.

With these considerations, our submission highlights the need to provide flexibility to the state government to determine the type and mode of ownership change they want to adopt and that too if privatisation is considered suitable by state leadership for their ground reality and specific objectives. PEG’s submission also highlights modifications in the proposed SBDs to aid protection of consumer interest, encourage efficiency in transaction, minimise governance lapses and increase accountability for future performance.