Home >News >India >Ladakh, J&K discom privatisation may be put on hold due to security concerns

NEW DELHI: Privatisation of electricity distribution companies (discom) in the union territories of Ladakh and Jammu and Kashmir (J&K) may be put on hold due to security concerns, among other reasons, said three people aware of the matter.

Tensions have been simmering along the India-China border in Ladakh's Galwan region while hostilities with Pakistan have risen in the recent past. Given the security imperatives, some believe that critical power infrastructure in such strategic areas should be controlled and managed by the government.

Experts have also cited low power demand in Ladakh and in some circles of J&K, and time required for making preparatory arrangements, such as unbundling of power companies, for the delay in the privatisation process.

“Ladakh faces geographical challenges. It has a load of only around 30 MW (mega watt) because of low population density. It will also require large investments because of less population. New solutions will have to be devised. There are also security concerns there. It has been put on hold. There has been no formal communication on the same," said one of the people cited above, requesting anonymity.

State-run Power Finance Corporation (PFC) has appointed SBI Capital Markets Ltd to help with the sale process to privatise discoms in J&K and Ladakh along with those in Dadar and Nagar Haveli, and Daman and Diu. Deloitte has received the mandate for Puducherry, Chandigarh and Andaman and Nicobar Islands. With the electricity load for Lakshadweep Islands low, it is also currently not being considered for privatisation.

“Jammu and Kashmir was never being thought of as whole for discom privatisation. It would first have been the populous and security wise safer areas such as Jammu carved out and considered for privatisation. The task is not easy and still under discussions," said another person cited above.

Mint had reported on 15 May about India’s plan to privatise all electricity discoms in the union territories. These discoms have an enterprise value of around $700 million.

Queries emailed to the spokespersons for power ministry, PFC and SBI Capital Markets Ltd remained unanswered.

With around 1.82 million consumers and a per capita electricity consumption of 1,131 kilowatt-hour (kWh), J&K has a peak power demand of 2,869 MW. In comparison, Delhi’ peak power demand had touched 7,409 MW last year.

After J&K was divided into two union territories, the Jammu & Kashmir Power Development Department (JKPDD), responsible for electricity transmission and distribution, was unbundled into JK Power Corporation Ltd., Jammu Power Distribution Co. Ltd., Kashmir Power Distribution Co. Ltd., and JK Power Transmission Co. Ltd. While these utilities have been incorporated, most of them are yet to be operationalised.

Also, in Ladakh, the plan is to club generation and distribution with the transmission function to be retained by Ladakh Power Distribution Department.

"There are issues around electricity supply and number of hours of supply in Jammu and Kashmir and Ladakh. Also, with the SERC (state electricity regulatory commission) been dissolved, there have been no tariff hikes.There are also issues around security," said the third person.

Indian troops along the Line of Actual Control (LAC) have been placed on high alert along with Indian Air Force stations in the region. The Galwan Valley clash, the worst in 45 years, has significantly frayed ties between the two countries.

In a response to the face-off along the border, India on Monday banned 59 Chinese apps including TikTok, Vigo Video and Helo. It is also looking at a wider decoupling exercise that involves imposing tariff and non-tariff barriers to check Chinese imports, including prior-permission requirements for power equipment imports from countries with which it has a conflict.

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