HC clears decks for privatisation of power services in Chandigarh

The Punjab and Haryana high court on Wednesday dismissed a petition from employees of Chandigarh power department, paving way for privatisation of power services in the city.

The decision to privatise the UT power supply services was taken on May 12, 2020, after directions from the Centre. The UT had announced that the process would be completed by that year-end, but the UT Powermen Union had approached the high court on December 1, 2020, against the move, stalling the process.

The union was of the view that the administration was selling 100% stake of the government in the absence of such a provision under Section 131 of the Electricity Act, 2003. Another argument of the union was that the department was running into profits and its revenue had been surplus for the past three years, still it was being privatised.

The bench of chief justice Sheel Nagu and justice anil Kshetarpal said that the scope of judicial review in a policy decision is “extremely narrow”. It also said the proviso to Section 133 of the 2003 Act ensured that the service conditions of the employees would not be adversely affected. It also took note of the UT administration submissions that the immovable assets of electricity wing were not proposed to be transferred.

The court also rejected the union’s argument that UT’s move was in violation of the 2003 Act.

Kolkata-based firm had bagged ₹871-crore tender in 2021

Notably, HC had stayed the privatisation process on two occasions in the past. But the Supreme Court intervened on UT’s plea and, on both occasions, the stay was vacated.

The administration on November 9, 2020 had invited bids and later in May 2021 declared Kolkata-based industrial and services conglomerate RP-Sanjiv Goenka (RPSG) Group as the highest bidder.

The group’s flagship Calcutta Electric Supply Corporation (CESC)’s wholly-owned subsidiary Eminent Electricity Distribution (EED) had quoted a bid of around ₹871 crore against the reserve price of ₹175 crore. It was one of the seven companies in the race for taking over the services.

“The process of tendering is complete and only letter of award was to be issued to the company as the matter was sub-judice. Now, the process can be completed,” senior advocate Chetan Mittal, who appeared for the firm, said.

Up in arms against privatisation, the UT Powermen Union in February 2022 had gone on a three-day strike, which had led to large-scale disruption of life in the city. Allegations were that power outages were due to sabotage by the protesting employees. Subsequently, disciplinary proceedings were initiated against 143 employees, while 17 outsourced employees were terminated. An FIR was registered on February 23, 2022 against eight persons.

Tariff still within JERC’s ambit

The UT electricity department caters to a city with a relatively low demand of around 400MW. As there are only 2.3 lakh consumers, if privatised, the department’s efficiency is expected to improve, specifically in terms of distribution of power.

The Joint Electricity Regulatory Commission (JERC) will continue to oversee and fix the tariff for the private sector operator, as being done for the government department.

From August 1 this year, JERC had approved a 9.4% increase in the power tariff against UT electricity department’s proposal of an up to 19.44% hike.

Opposing UT’s proposal, Chandigarh MP Manish Tewari had requested the JERC to provide 300 units of free electricity to households with an income of less than ₹20,000 per month.

Earlier in 2022-23, the commission had approved an increase of 25 paise in retail tariff up to 150 kWh (kilowatt-hour) per month. Before that, the last increase in the domestic and commercial electricity tariff was implemented in 2018-2019.

Road to privatisation: The journey so far

May 12, 2020: UT decides to privatise power distribution

November 9: Bids invited

December 1: HC orders stay on process, acting on plea from power employees

January 12, 2021: SC stays HC order on UT’s plea

February 9: SC remands matter back to HC

April 19: UT announces it will fast-track the process

May 28: HC stays the process again

June 28: SC once again stays HC order on UT’s appeal

August 4: Bids opened, EED quotes highest bid of ₹871 crore

January 6, 2022: Union Cabinet approves the bid

February 22: Employees go on strike, leading to major power disruption; HC takes suo motu note

March 10: UT assures HC letter of intent will not be issued to the private company pending court case

November 6, 2024: HC dismisses power employees’ plea.