July 19, 2013

Pitching for privatisation in the power distribution sector, Planning Commission Deputy Chairman Montek Singh Ahluwalia suggested it can help in reducing huge losses and half of this business should be with private players.

“Of the total power distribution sector in the country, only 4 per cent is through private sector suppliers. I don’t think why it should not go to 50 per cent in the next 10 years,” Mr. Ahluwalia said.

The power distribution sector is suffering due to huge losses of over Rs. 246,000 crore in the country.

Asked whether privatisation can help the sector, Ahluwalia said: “I believe so, I don’t see any reason why we should not experiment. If we are happy to have generation and transmission being done by private sector, then there is no logical reason why distribution should not be done by private sector significantly.”

Elaborating further, he said: “The distribution sector is really the weak part. The financial health of the distribution segment is an indication that financial viability of the system as a whole and at the moment that is not viable because they are making huge losses and it is not sustainable.”

“There was big success in expanding in generation capacity in the country. That was not extended to fuel supply for the sector. But that is now coming under control,” he added.

Mr. Ahluwalia also suggested that the States should separate rural power feeders as it would have spillover benefits for them.