Why Tamil Nadu does not need privatisation of power distribution
Tamil Nadu's government has reaffirmed its decision against privatizing power distribution, citing a study that suggests privatization offers little benefit for states with already low technical and commercial losses. The report highlights that private players are unlikely to serve difficult or low-revenue areas, making public distribution more equitable.
Why it matters
It addresses the ongoing debate regarding the efficiency of public versus private utility management in developing economies.
A recent assertion by Tamil Nadu Minister for Energy Resources R. Nirmalkumar that electricity distribution would not be privatised in the State is not only a policy statement but also a reiteration of the finding of a study commissioned by the 16 th Finance Commission on the financial performance of electricity distribution companies (DISCOM).
Carried out by Prayas, a Pune-based non-governmental and non-profit body, the study states that “privatisation can improve operational efficiency and may be relevant in DISCOMs with unmanageably high AT&C [Aggregate Technical and Commercial] losses. However, it may not lead to major benefits” in States such as Tamil Nadu, where “AT&C losses are low and supply and service quality is relatively good,” the study observes.
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