Punjab and Haryana High Court stays Chandigarh electricity distribution company privatisation bid

The government’s plan to initiate privatisation in the power distribution sector beginning with sell-off of utilities in Union Territories has hit a roadblock. The Punjab and Haryana high court stayed the Centre’s privatisation bid of Chandigarh electricity distribution company saying it is illegal and the utility cannot be completely sold to private companies.

“The impugned action of the respondents in taking effective steps to privatise the Electricity Wing, U.T., Chandigarh/power utility in Chandigarh by selling of 100% stake of the Govt. is not legally sustainable, the same being violative of Section 131 (2) of the Act, as per which the power department/utility cannot be transferred to a totally private entity with no stake or control of the Government at all,” the high court in its order said.

Chandigarh was the first Union Territory to issue tender inviting bids to sell off its power distribution company. The Central government had in May announced privatisation of discoms in union territories as part of its Atma Nirbhar Bharat plan. The last date for bid submission was December 30, 2020.

“The sale of 100% stake of the U.T. Administration in the Electricity Wing of U.T., Chandigarh which is running in profits and is revenue surplus for the past 3 years and is also economically efficient having T &D losses less than 15 % the target fixed by the Ministry of Power is unjust and illegal,” it said.

The court said the bidding scheme has been prepared without calling for the objections of all the stakeholders i.e. consumers and employees of the electricity wing as well as the heads of the three state governments -- Punjab, Haryana and U.T. Chandigarh and thus cannot be legally sustained and acted upon.

The court said issue will require detailed deliberations as it touches the employment scheme of the society in general.

“The operation and effect of the impugned Office Memorandum dated 10.06.2020 and Notice Inviting Bids dated 10.11.2020 shall remain stayed till further orders. To be heard within six months after the resumption of normal functioning of the court,” the high court said while admitting the matter.

Finance minister Nirmala Sitharaman had in May said privatisation of distribution business of Union Territories could provide a model for emulation by other utilities across the country. The Centre is also working on privatisation of other union territories.

Recently, Uttar Pradesh shelved the privatisation plan of its power distribution companies due to agitation by employee trade unions.