The Hindu : New Delhi News : Sheila's no to equity dilution in discoms

Online edition of India's National Newspaper
Friday, Dec 03, 2004

New Delhi

New Delhi

Sheila's no to equity dilution in discoms

By Sujay Mehdudia

NEW DELHI, DEC. 2. Apprehensive of stoking another controversy over privatisation of power in the Capital, the Delhi Government is understood to have rejected a proposal by the private power distribution companies to increase their equity holding from the present 51 per cent to 77 per cent. The companies had been putting pressure on the Government to dilute its equity in their favour and were being supported by a group of bureaucrats within the Delhi Government.

According to sources in the Delhi Government, the matter was discussed in detail and finally it was decided not to rake up another controversy as the power reforms had already come under scrutiny in view of the widely criticised "leniency" shown by the Delhi Government towards the private companies in respect of various issues. The Comptroller and Auditor General (CAG) report had also severely indicted the Delhi Government over the procedure followed for privatisation, even though the opposition Bharatiya Janata Party had failed to cash in on the issue.

Sources said the matter was put up before the Power Minister, Haroon Yusuf, by the Principal Secretary (Power), S. Regunathan, who is also the Delhi Chief Secretary. It is understood that a group of former and present senior IAS officers had strongly supported the move to dilute the equity of the Delhi Government and pass on the same to the private distribution companies. The Delhi Government holds a 49 per cent share in the present holding pattern and the private players hold 51 per cent after the July 2002 privatisation. However, when the issue was discussed in detail by Mr. Yusuf, it was found that it would not be feasible to tamper with the five-year Memorandum of Understanding (MoU) signed between the Delhi Government and the private companies and any such thing should only be taken up after the expiry of the five-year period. The matter then reached the Chief Minister, Sheila Dikshit, who was apprised of the facts and "political as well as administrative'' implications of taking such a step.

It is understood that after a full appraisal of the situation, the Chief Minister went with the view of the Power Minister and turned down the bid to reduce the Government equity.

According to political observers, the Government did not want to burn its fingers as it was already caught in a controversy surrounding the reforms process and also the benefits relating to the employees who stood automatically transferred to the private companies. It was felt that any further dilution of the MoU would only put a stick in the hands of the Opposition as well as the rivals of the Chief Minister to beat the Government with.

Another argument was that the Government was already facing allegations of sacrificing the interests of the common man and not putting the private companies under leash over various issues as also going out of the way to grant them concessions. The Government has already drawn up a proposal to issue policy directions to the Delhi Electricity Regulatory Commission (DERC) to compensate the private companies for the expenditure incurred by them for making payments under the Voluntary Retirement Scheme (VRS) and giving pension benefits to its employees.

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