The government’s renewed focus on reforming debt-laden state power distribution companies (DISCOMs) — including a potential $12 billion bailout plan — signals a strong intent to boost private participation, enhance competition, and improve financial health in the sector.
“There is a very clear direction that the government wants to increase private participation in distribution companies… they want to bring in competition in power distribution and, number three, they want to improve profitability,” Nigania said, citing recent policy discussions, draft amendments to the Electricity Act, and a Supreme Court order. He added that these steps could lead to tariffs becoming more reflective of actual costs, improving sector efficiency.
Nigania believes that private operators with existing distribution footprints are best placed to benefit from these reforms. “All of them have presence in different parts of the country and they stand to gain the most as more DISCOMs get privatised,” he said. He also noted that a stronger distribution segment would spur higher capital expenditure and investment opportunities for power generators.
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When discussing successful privatisation models, Nigania emphasised that majority private ownership is key. “The only places it has worked is where the management control and the largest stake is with the private entity. So, 51% stake with a private entity and the balance with the state — that’s the kind of model which works,” he explained.
Among private players, Tata Power stands out for its wide operational experience. While peers have focused mainly on urban areas like Mumbai, Delhi, and Kolkata, Tata Power has managed statewide distribution in Odisha, a unique success story in India’s power sector. “Tata Power is the only one who has done it across the state of Odisha — and doing it well,” Nigania said.
However, he cautioned that progress will be gradual and not without resistance, as previous privatisation attempts have often faced local opposition. Still, the government’s policy intent and financial support mark an important step toward a more efficient and competitive power distribution ecosystem.
For the entire interview, watch the accompanying video
