Montek pitches for privatisation of power distribution to check losses

Planning Commission Deputy Chairman Montek Singh Ahluwalia has suggested that the power distribution sector be privatised to help reduce huge losses, adding that at least half of the business should be with private players.

The sector is suffering due to huge losses of over Rs 2.46 lakh crore.

"Of the total (power) distribution (sector) in the country, only 4 per cent is through the private sector suppliers. I don't think why it should not go to 50 per cent in the next 10 years," Ahluwalia said on the sidelines of an event in the national capital.

He prescribed privatisation in the sector either directly or through the franchisee route by the state.

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 transmission being done by private sector...there is no logical reason why distribution should not be done (by private sector) significantly."

Elaborating further, Ahluwalia said that the distribution sector is the weak part of the power sector. "The financial health of the distribution segment is an indication that financial viability of the system as a whole is not sustainable...They are making huge losses."

Talking about the restructuring plan for power discoms, the Planning Commission Deputy Chairman said it was an emergency response to "very fundamental problem".

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

Ahluwalia also suggested that the states should separate rural power feeders as it would have spill over benefits for them.

With inputs from PTI