Ladakh, J&K discom privatisation may be put on hold due to security concerns.

Privatisation of electricity distribution companies (discom) in the union territories of Ladakh and Jammu and Kashmir (J&K) may be put on hold due to security concerns, among other reasons, said three people aware of the matter.

Tensions have been simmering along the India-China border in Ladakh's Galwan region while hostilities with Pakistan have risen in the recent past. Given the security imperatives, some believe that critical power infrastructure in such strategic areas should be controlled and managed by the government.

Experts have also cited low power demand in Ladakh and in some circles of J&K, and time required for making preparatory arrangements, such as unbundling of power companies, for the delay in the privatisation process.

“Ladakh faces geographical challenges. It has a load of only around 30 MW (mega watt) because of low population density. It will also require large investments because of less population. 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 one of the people cited above, requesting anonymity.

State-run Power Finance Corporation (PFC) has appointed SBI Capital Markets Ltd to help with the sale process to privatise discoms in J&K and Ladakh along with those in Dadar 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 low, it is also currently not being considered for privatisation.

“Jammu and Kashmir was never being thought of as whole for discom privatisation. It would first have been the populous and security wise safer areas such as Jammu carved out and considered for privatisation. The task is not easy and still under discussions," said another person cited above.

Mint had reported on 15 May about India’s plan to privatise all electricity discoms in the union territories. These discoms have an enterprise value of around $700 million.

LIVEMINT