People’s Commission On Public Sector And Public Services Condemns Privatisation Of Electricity Distribution In Uttar Pradesh
Government-owned thermal power plants generate electricity at Rs 4.28 per unit and NTPC produces at Rs 4.78 per unit, UPPCL is procuring electricity from private entities at rates ranging from Rs 7.50 to Rs 19 per unit
The People’s Commission on Public Sector and Public Services (PCPSPS) strongly opposes the Uttar Pradesh Government’s decision to privatise power distribution in the state. The move to privatise Purvanchal Vidyut Vitaran Nigam Limited (PVVNL) and Dakshinanchal Vidyut Vitaran Nigam (DVVNL) is a direct violation of previous agreements made with employee unions and poses a significant threat to public interest. Despite the government’s claims, past experiences across India have demonstrated that privatisation of electricity distribution leads to increased tariffs, financial mismanagement, and an added burden on consumers, particularly farmers and low-income groups. The responsibility of ensuring affordable electricity for all citizens lies with the state, which was the fundamental reason behind the establishment of State Electricity Boards.
The government’s argument that privatisation is necessary due to the financial losses suffered by PVVNL and DVVNL is misleading. These so-called losses are primarily a result of the state government’s failure to reimburse subsidies meant for lower-income groups and the long-standing non-payment of dues by various government departments and large corporate entities. The total outstanding dues amount to Rs 1,25,000 crores, a figure that far exceeds the claimed losses of Rs 1,10,000 crores. Instead of addressing these underlying issues, the government is attempting to transfer the financial burden to private entities, which historically have only raised electricity tariffs instead of improving services.
Another major concern is the exorbitant cost at which UPPCL is purchasing electricity from private power producers. While government-owned thermal power plants generate electricity at Rs 4.28 per unit and NTPC produces at Rs 4.78 per unit, UPPCL is procuring electricity from private entities at rates ranging from Rs 7.50 to Rs 19 per unit. This unsustainable pricing is a key factor contributing to the financial struggles of the electricity department. Furthermore, the comparison of electricity tariffs shows that private providers impose significantly higher rates on consumers. For example, Tata Power in Mumbai charges up to Rs 15.71 per unit for higher consumption brackets, whereas UPPCL currently provides electricity at much lower rates.
The manner in which the privatisation process is being carried out is highly concerning. The state government has failed to conduct a fair valuation of assets or assess revenue potential before proceeding with the sale, in violation of Section 131 of the Electricity Act, 2003. While the total assets of these DISCOMs are estimated to be worth Rs 70,000–80,000 crores, the government has set the minimum bid price at a shockingly low Rs 4,290 crores for PVVNL and Rs 3,260 crores for DVVNL. This deliberate undervaluation paves the way for large-scale financial mismanagement and corporate profiteering at the expense of public resources.
The impact of privatisation extends beyond financial concerns, as more than 70,000 regular and outsourced employees now face the threat of job loss. When electricity distribution in Greater Noida and Agra was privatised in 1993 and 2010, private companies did not absorb a single employee from the electricity boards. The government’s attempt to invoke the Essential Services Maintenance Act (ESMA) to suppress protests against this decision is undemocratic and an outright attack on workers’ rights.
The People’s Commission on Public Sector and Public Services (PCPSPS) calls on the Uttar Pradesh Government to immediately withdraw the privatisation proposal. Electricity is a fundamental necessity, and its distribution must remain in public hands to ensure affordability, transparency, and equitable access. The Commission stands in solidarity with electricity employees, consumer groups, and concerned citizens who are resisting this move. We also urge the Union Government to intervene and prevent the large-scale corporate takeover of essential public utilities.
