Privatization Will Not Bring Immediate Electricity Price Relief

The government's proposal for privatizing electricity distribution companies (DISCOs) involves a two-tier business model. This model separates ownership of distribution infrastructure from electricity sales and supply operations. However, the changes are not expected to bring immediate relief to electricity prices. Consumers would continue paying about Rs.

17 per unit to cover costs associated with unused power generation capacity. Although competitive suppliers may eventually offer electricity at rates below government-approved tariffs, immediate price reductions are unlikely. The main goal is to keep distribution infrastructure regulated while opening electricity procurement and sales to private sector competition, ending the Central Power Purchasing Agency's role as the sole electricity buyer and introducing multiple private suppliers into the market.

Once DISCOs like FESCO are privatized, the government would auction their electricity generation capacity and customer portfolios to private suppliers, who would then assume responsibility for purchasing electricity and supplying it to their respective customers.