Chandigarh makes major stride towards power privatisation
Chandigarh administration issues Letter of Intent to Kolkata-based company, setting the stage for electricity department’s takeover
In a significant move towards the privatisation of power services in Chandigarh, the UT electricity department on Friday issued the Letter of Intent (LoI) to a Kolkata-based company, advancing a long-standing and contentious process.
UT administrator Gulab Chand Kataria approved the LoI, allowing the department to formally hand it over to the selected company, which will now begin the process to take over the management of power services.
This development marks a key milestone in the road to privatisation, which began with UT’s decision in May 2020 on the directions of the central government.
The LoI signifies a preliminary commitment by one party to do business with another, outlining the essential terms of the prospective deal and setting the stage for the next phase of privatisation.
It follows Punjab and Haryana high court’s November 7 dismissal of a petition by employees of the UT electricity department.
Hanging fire since 2020
The UT administration had announced that the privatisation process will be completed by the end of 2020. However, the UT Powermen Union challenged the move in court on December 1, 2020, stalling the process.
The union had argued that the administration was selling 100% stake of the government in the absence of such a provision under Section 131 of the Electricity Act, 2003. Another argument of the union was that the department was running into profits and its revenue had been surplus for the past three years, still it was being privatised.
The UT administration on November 9, 2020 had invited bids and later in May 2021 declared Kolkata-based industrial and services conglomerate RP-Sanjiv Goenka (RPSG) Group as the highest bidder.
The group’s flagship Calcutta Electric Supply Corporation (CESC)’s wholly-owned subsidiary Eminent Electricity Distribution (EED) had quoted a bid of around ₹871 crore against the reserve price of ₹175 crore. It was one of the seven companies in the race for taking over the services.
President of power distribution at the RPSG Group, PR Kumar said, ‘’We are excited to take on this responsibility and serve the people of Chandigarh. We deeply appreciate the trust placed in us by the central government and the UT administration. We also want to reassure the employees of the Chandigarh electricity department that their welfare and service conditions, including retirement benefits, will be fully upheld as per the agreement. The RPSG Group, with a workforce of over 50,000 employees, is committed to serving the people of Chandigarh with utmost dedication and care.”
Tariff still under JERC’s control
The UT electricity department caters to a city with a relatively low demand of around 400MW. As there are only 2.3 lakh consumers, if privatised, the department’s efficiency is expected to improve, specifically in terms of distribution of power.
The Joint Electricity Regulatory Commission (JERC) will continue to oversee and fix the tariff for the private sector operator, as being done for the government department.
From August 1 this year, JERC had approved a 9.4% increase in the power tariff against UT electricity department’s proposal of an up to 19.44% hike.
Earlier in 2022-23, the commission had approved an increase of 25 paise in retail tariff up to 150 kWh (kilowatt-hour) per month. Before that, the last increase in the domestic and commercial electricity tariff was implemented in 2018-2019.
Power employees to go on indefinite strike from Dec 6
The UT Powermen Union has decided to go on an indefinite strike from December 6 to protest the privatisation of electricity services in the city.
The decision was announced by the union during a protest rally held near Hotel Shivalik in Sector 17. The rally was supported by employees from various UT departments, and engineers from different institutions and organisations.
Chandigarh MP Manish Tewari, who also participated in the protest rally, said, “I am personally against privatisation. I opposed the privatisation of Air India as well. This government is privatising public assets. I stand with the employees because this fight is not just for Chandigarh but for the entire country.”
He further added, “Privatisation of electricity in Delhi led to electricity rates doubling there. We will not let that happen here. We will win this fight.”
While addressing the gathering, the union alleged that the Government of India and the Chandigarh administration were illegally and unilaterally privatising the well-functioning and profitable electricity department. They claimed that the move violates rules, regulations and the bidding/tendering process, as well as the provisions of the Electricity Act, 2003.
The union further stated that the decision was made without consulting key stakeholders, including employees and consumers, whose interests will be adversely affected by privatisation.
Union’s general secretary Gopal Joshi declared, “We will not allow privatisation of the electricity department under any circumstances.”
At a meeting chaired by UT administrator Gulab Chand Kataria on Thursday, the matter related to the service benefits of the employees to be transferred to the new company was discussed. It was directed by the administrator to ensure that all present service benefits of employees be safeguarded. The administrator specifically directed to address the grievances of the UT Powermen Union properly.
Previously, the union had gone on a three-day strike in February 2022, which had led to large-scale disruption of life in the city. Allegations were that power outages were due to sabotage by the protesting employees. Subsequently, disciplinary proceedings were initiated against 143 employees, while 17 outsourced employees were terminated. An FIR was registered on February 23, 2022 against eight persons.
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