AIPEF Condemns Privatisation Ultimatum by Group of Ministers
New Draft Bill Proposes Debt Restructuring and Strategic Equity Divestment for DISCOMs
Hyderabad: The All India Power Engineers Federation (AIPEF) has strongly opposed the central government’s push to privatise state power distribution companies (Discoms) and vowed to build a united front against the reforms.
During a recent meeting, the Group of Ministers (GoM), which includes energy ministers from Uttar Pradesh, Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu, has recommended three options for state governments to privatise discoms or risk losing central financial assistance.
According to the GoM minutes, the first option requires the state government selling 51 per cent stake in discom to private companies, and the central government absorbing unsustainable debt and offering a zero-interest loan, repayable over 50 years for the privatised share.
The second option entails transferring management control of discoms to private companies, backed by government absorption of debt and five years of financial grants. The third option mandates listing state power companies on the stock exchange, with government financial aid restricted only to those with an ‘A’ grade rating.
Speaking to Deccan Chronicle, AIPEF chairman Shailendra Dubey described these alternatives as “blackmail for privatisation” and rejected them outright. Secretary-general P. Rathnakar Rao criticised the GoM and condemned the participation of the All India Discom Association in the meeting, accusing it of representing private interests.
Adding to the complexity, a new draft discom reforms bill proposes a financial and operational framework that would allow states to address debt issues and attract private investment without fully surrendering control.
The Bill recommends that states divest a minimum of 20 per cent equity, potentially including strategic partners who may assume management control. The government would absorb unsustainable debt and provide five years of equity grants for infrastructure upgrades.
For partial divestments exceeding 26 per cent, the Bill stipulates the transfer of management rights, debt-servicing support, and government-backed interest subvention schemes for five years to ensure a stable transition. States unwilling to privatize would be required to list their discoms on stock exchanges and meet profitability and credit rating benchmarks to qualify for government aid.
