Supreme Court Lifts Stay Order on Chandigarh DISCOM Privatization
The order was in response to the High Court of Punjab and Haryana’s order on December 1, 2020
January 20, 2021
The Supreme Court of India issued orders placing a hold on a stay order given by the High Court of Punjab and Haryana, on the privatization of Chandigarh’s electricity distribution company (DISCOM). The Apex Court issued the interim stay order on January 12, 2020.
The order came in response to the High Court of Punjab and Haryana’s order on December 1, 2020. It had issued a stay order on privatizing Chandigarh’s DISCOM following a petition by the UT Powermen Union of Chandigarh. The union had called the move to privatize the DISCOM ‘unjust and illegal.’
They had argued that the Chandigarh DISCOM had been running in profits and has been revenue surplus for the last three years, adding that even its transmission and distribution losses were less than 15% of the target set by the Ministry of Power.
The union had cited a provision in the Electricity Act, 2003, which states that a power department or utility cannot be transferred to a private entity, leaving no stake or control of the government in it at all.
In May 2020, the central government came up with a proposal to privatize DISCOMs in the union territories. Following this announcement, Tata Power took over the management of the Central Electricity Supply Utility of Odisha (CESU) for the distribution and supply of power in Odisha’s five circles.
Later, the Ministry of Power issued draft standard bidding documents to select bidders for acquiring a majority stake in distribution licensees for the distribution and retail sale of electricity.
In November, the Chandigarh Administration issued a request for a proposal inviting bidders to acquire its DISCOM. In the notice inviting bids, the Electricity Wing of the Engineering Department of the Union Territory of Chandigarh had called for qualified entities to participate in the competitive bidding process to acquire 100% of its shares in its DISCOM.
Mercom has previously written about why privatizing struggling DISCOMs could help them out of their financial troubles and push the Indian power sector forward. DISCOMS are at the root of all the problems in the Indian energy sector. Due to their financial ineptitude, attracting investments into the sector has become incredibly challenging. Unless steps like privatization of DISCOMS is put on the table, chances of a turnaround in the energy sector are minimal.
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.