• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

Discoms Overcharging Consumers: Kejriwal Must Use The System To Weed Out Corrupt Practices

Photo Credit :

To clip the wings of the private sector, it is important to have companies compete with each other, writes Neeraj Thakur

The Comptroller and Auditor General of India (CAG) audit report of the electricity distribution companies or discoms has upheld the allegations of Delhi chief minister Arvind Kejriwal that these companies have overcharged the Delhi consumers for over a decade. While the report vindicates Kejriwal and his party’s stand against Sheila Dixit led Congress and the BJP who mocked the current CM for questioning the accounts of the discoms, it would be important to see how the Kejriwal government punishes the guilty companies.
Kejriwal in the past has said that if he comes to power he will take away the contracts from the companies that are found guilty, but, such an action is not practical because claims of a CAG report can be challenged in the court.
However, If Kejriwal really wants to solve the problem of the electricity distribution sector for once and for all, then he must use the system to weed out corrupt practices rather than expecting the discoms to be honest. In a monopoly, the government sector becomes inefficient and lethargic while the private sector unleashes its profiteering tendencies. So, when the electricity distribution sector of Delhi was handed over from the government run DESU or Delhi Electricity Supply Undertaking to the private sector players like Reliance Infra owned BRPL and BYPL and Tata Power owned TPDDL, these companies used all the means to make profits.
The CAG audit report on power discoms says, “RA (Regulatory Assets) of three discoms which stood approved as on March 31, 2013, were Rs 13,657.87 crore. However, audit findings contained in various chapters of this report indicate that the RA of the three discoms were inflated by at least Rs 7956.91 crore”.
To clip the wings of the private sector, it is important to have companies compete with each other. This keeps the price of services delivered by them down. In this regard, a path-breaking idea is buried in the files of the union power ministry that seeks to segregate the business of providing electricity wires from the business of supplying electricity to consumers. In such a scenario, there could be more than two companies that would compete to install their meters at the customers’ home to supply electricity. This would force them to be competitive in sourcing electricity from power producers. Currently, the same company is responsible for providing electricity as well as wires that carry the electricity to the doors of a consumer.
While this idea was proposed ahead of the Delhi state assembly elections in 2015 by the BJP-led front, Kejriwal should not shy away from implementing it in his state if he wants to bring the price of power down through competition, because that is the only full proof way to achieve that end.
Kejriwal has been pressurising the discoms to re-negotiate their power purchase agreements with the power producers, but he wields no real power to actually force the private companies. But as the head of the state he can introduces the segregation of the wire and the electricity supply business by inviting bids for both the segments.
While the CAG report can lead to punishment of the power discoms, but the only way to bell the private sector cat is by creating cut throat competition so that only the most efficient and competitive survives.