Overview
- Power Ministry drafts link federal support to state actions that either hand managerial control to private partners or take utilities public within three years.
- States are offered three routes: create a new distribution company and divest 51% for a 50‑year interest‑free loan, sell at least 26% with management transfer for five years of concessional loans, or list the utility to qualify for capex aid under strict profit and rating norms.
- The plan requires states to ensure at least 20% of power consumption is served by private operators and to take on unsustainable distributor debt with FRBM exemptions, backed by long‑tenor central loans, interest subvention and equity grants.
- Discom finances remain strained with about Rs 7.08 lakh crore in accumulated losses and Rs 7.42 lakh crore in outstanding debt as of March 2024, according to the draft and officials cited in reports.
- Engineering unions led by AIPEF have denounced the proposals as coercive, while market watchers expect potential roles for private firms such as Tata Power, Torrent Power, Adani Power and Reliance Power, and states like Uttar Pradesh are advancing privatisation pilots.