Security fears may hamper Ladakh, J&K power discom privatization

Security fears may hamper Ladakh, J&K power discom privatization

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NEW DELHI :
Privatization of electricity distribution in Ladakh and Jammu and Kashmir (J&K) may have to wait due to security and strategic concerns and challenges of terrain and low power demand, three people aware of the development said.

This comes against the backdrop of mounting tensions along the India-China border, particularly in the Galwan region of Ladakh, and increasing hostilities with Pakistan. Given the security imperatives, some believe that there is a need for critical power infrastructure in strategic areas to be controlled and managed by the government.

Low power demand in Ladakh and some circles of Jammu and Kashmir, and extra time to unbundle power companies may add to the delay, said the people cited above, who are involved in the Union territories’ discom privatization process.

“Ladakh faces geographical challenges. It has a load of only around 30MW (megawatts) because of low population density. It will also require large investments. 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 the first of the three people cited above, all of whom spoke requesting anonymity.

State-run Power Finance Corporation (PFC) has appointed SBI Capital Markets Ltd to help with the discom privatization in Jammu and Kashmir, and Ladakh, along with those in Dadra 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 being low, it is currently not being considered for privatization.

“Jammu and Kashmir was never being thought of as whole for discom privatization. It would first have been the populous and security-wise safer areas such as Jammu [that would have been] carved out and considered for privatization. The task is not easy, and is still under discussion,” the second of the three persons said.

Mint reported on 15 May about India’s plan to privatize 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 2,869MW. In comparison, Delhi’s peak power demand touched 7,409MW last year.

After J&K was reorganized as two Union territories, the Jammu & Kashmir Power Development Department (JKPDD), which was 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, some are yet to be operationalized.

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) dissolved, there have been no tariff hikes. There are also issues around security,” said the third person cited above.

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