After Railways, Privatisation of Power Companies; Many to Lose Jobs

Union Ministry orders complete privatisation of Power Distribution Companies. The move will be beneficial for corporates, but detrimental for both employees and consumers.

power companies

“The SBDs literally sound the death knell for State discoms since private players will take over all the assets without liabilities,”

TEEA president N Sivaji 

On 20th September, the Union Ministry sent out a standard bidding document to all states and union territories which can be referred to while privatising power companies. Recently, the Central Government issued an order for the complete privatisation of power distribution in the country under the Atmanirbhar Package. The Union Ministry has given stakeholders a deadline till October 5th to voice their complaints.

The document is prepared in such a way that the transfer will be quick.

Corporate India has been rejoicing the move, with Vinayak Chatterjee, the Chairman of Feedback Infra calling it the “biggest investment opportunity” at the moment. But privatisation will be harmful to citizens: both consumers and workers.

Power Companies vs Consumers

The Electricity (Amendment) Bill 2020 states that subsidy and cross subsidy will be abolished in the coming three years under the new tariff policy and no one will be given electricity below cost.

Because of this, “Privatization of power companies will have the greatest impact on the common people”, writes Girish Malviya; Currently, farmers, citizens who live below the poverty line and consumers who spend 500 units of electricity per month get subsidy. Lack of subsidies will make electricity naturally more expensive for all domestic consumers. This will especially effect farmers, who already have to compete against big companies because of the new Agricultural Laws, and will now have to pay the full cost of electricity. 

The Ministry has suggested several suggestions with regards to the involvement of State Governments into the companies, ranging from 0-26%.

Power Companies vs Government Employees

Power employees have also been raising their concerns regarding this move, the biggest of which is the transfer scheme. It is clearly mentioned that privatisation, they will become employees of private companies. The Mathrubhumi reports that 12 Lakh staff– including employees and engineers- will be transferred from public to private employees. This would lead to job insecurity, and loss of privileges as the new companies will be responsible for expenses after the staff is transferred. The document directs that the amount raised for the retirement benefit should be handed over to the trusts.

Privatisation will empower companies to exploit their workers; Tata Power has already written to the Orissa Electricity Regulatory Commission rejecting the pre-conditions, asserting that employees will have to work on the terms of Tata Power or would be be thrown out. Malviya writes that private companies will also exclude contract workers, because of which thousands of workers would lose their jobs.

Power Companies vs States

The All India Power Engineers Federation (AIPEF) threatened to go on an indefinite strike, stated chief Shailendra Dubey said:

“Union government wants to privatise power discoms in the country and even healthy distribution companies making profit have been proposed to be privatised. This is unacceptable. The Centre wants to impose its will on all states and arm-twist state governments to fall in line.”

State Governments have very little power in the matter. While handing over companies from the state to private companies, the state government is allowed to decide what to do with the shares. Otherwise, the condition of implementing the reforms has been imposed for availing benefits of Rs 20 lakh crore relief package announced by Modi in may. Minister for Power M.M Mani stated that Kerala will oppose the move to privatise power distribution.

Read More: To Save Public Sector, Need a Mass Movement Against Privatisation



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June 2024



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