The Peoples’ Commission on Public Sector and Public Services (PCPSPS) has expressed serious concern at the “unilateral privatisation” of electricity distribution entities in the Union Territories (UTs) and strongly objected to the Centre “exercising its power in a completely arbitrary and unilateral manner in blatant violation of the spirit of federalism” in deciding to privatise the Chandigarh electricity department.
The shares of Chandigarh electricity department will be transferred to a private company. According to reports, Kolkata-based RP-Sanjiv Goenka Group had quoted the highest bid for the department.
In a press statement issued on Wednesday, the PCPSPS, said: “There is no provision in the law that gives unilateral and complete discretion to the government of India to take unilateral decisions in the matter of Union Territories without even consulting the local government or administration.”
The PCPSPS, which comprises academics, jurists, former bureaucrats, trade unionists and social activists, was formed in the background of the Narendra Modi’s government push towards privatisation during the pandemic.
“The implications of privatising public enterprises constituted in accordance with Article 19(6) (ii), read with Article 12, of the Constitution prima facie violate the welfare mandate spelt out in the Directive Principles and the other provisions of the Constitution,” the Commission said.
Strongly objecting to the “Centre exercising its power in a completely arbitrary and unilateral manner”, the members said that despite Chandigarh being the joint capital of Punjab and Haryana, “neither of the states were consulted about the privatisation of the Chandigarh electrical department”.
Mentioning the example of Puducherry, the PCPSPS said that the legislature “unanimously rejected the proposal to privatise the electricity distribution system” adding that the chief minister had recently assured the employees that the government would not privatise the company.
Objecting to the proposal of selling 100% shares of the electricity distribution companies of in other UTs, including Chandigarh, unlike the sale of 51% shares of Delhi Electric Supply Undertaking to Tatas and Reliance, the Commission said that “this is being done even before finalising the standard bidding document draft” circulated by the government.
“The entire exercise is based on a private consultant determining the reserve price and then a limited tender being called for where there seems to be a collusion since the number of players available in the country are very limited,” the members, including former Chandigarh DC and home secretary MG Devasahayam, former Central power secretary EAS Sarma, former Maharashtra State Electricity Regulatory Commission chairman VP Raja and former Rajasthan additional chief secretary Aditi Mehta.
Questioning the logic behind privatising the Chandigarh electricity department, the PCPSPS said it has reported “the lowest transmission and distribution loss and sizeable profits year after year and charges lower tariffs compared to Punjab and Haryana”. Besides, consumers don’t have serious complaints either, the members added.
Pointing out to the lack of an elected government, the PCPSPS said that the private owner will “not be accountable to the people of Chandigarh. Even for redressal of grievances, consumers will have no alternative but to approach the Joint Electricity Regulatory Commission, which is not based in Chandigarh. Consumers would be entirely at the mercy of the private undertaking, which will have no accountability save to its shareholders”.
Since a big chunk of electricity supply is consumed by the large number of government offices, institutions and installations with minimum industrial, “it would be counter-productive to privatise the electricity department, whose largest consumer is the government itself,” the members reasoned. “The government’s own expenditure would increase substantially.”
Highlighting the “strategic implications” of the privatisation of the distribution department, the PCPSPS said: “Chandigarh is located close to the international border and the Western Army Command HQ is just across the city at Chandimandir. Considering the liberalised FDI ceilings available for power companies, foreign investors could invest in the private company and exercise oversight on the operations of the Discom. Realtime access to information on the Discom’s operations may have adverse strategic implications,” calling for circumspection before “rushing into handing over the Discom to a private company”.
The Commission urged the Centre to halt the privatisation and start consultation with the governments of Punjab and Haryana, local bodies, employees and other stakeholders. “It is also important that the bidding document be made public detailing the terms and conditions under which public assets, particularly in respect of alienation of land, would be transferred. This should have the consent of the Parliament or the legislature, as may be relevant, since the assets have been built over generations with public money.”
