Govt mulls delicensing electricity sector: Why Budget 2021 puts power back into the hands of the people

As per the latest reports, India’s Power Ministry is preparing to move a draft Bill in Parliament which will propose new amendments to the Electricity Act that seek to remove the wording ‘distribution licensee.’

What this will effectively do is, reportedly, enable existing electricity distribution companies (discoms) to continue operating but pave the way for the entry of new participants into the sector to manage infrastructure relating to power distribution.

The overall effect of the move will be to increase competition within the power distribution sector and provide greater variety to consumers who, for years, have struggled with increasing electricity prices and persistent power cuts.

Finance Minister Nirmala Sitharaman, in her budget speech delivered on February 1, had drawn attention to the need to increase alternatives to consumers enabling them to choose their own distribution company. There was a need to address the monopolisation of power distribution to spur innovation and drive down costs, she had noted.

In truth, power distribution remains the most crippled part of the electricity value chain, and the COVID-19 pandemic only further exposed the need for serious structural reforms in the sector.

Times Now
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