Issues raised by UT Powermen Union had included the following:

Electricity prices for consumers would go up as a consequence of the privatisation, as the new
private sector owners would be driven by the profit motive;

The quality of supply in Chandigarh was good, distribution losses were around the government
target of 15% and the discom was profitable, so privatisation was not required;

As part of the privatisation process, the union territory government had not conducted a
consultation with stakeholders, including consumers and employees;

No provisions had been made for reservation of jobs for OBCs, sports personnel, ex-army
personnel, etc; and

The privatisation was not permitted by law, as the Electricity Amendment Bill, 2020, which
envisaged and provided the statutory basis for the privatisation, had not yet been passed.

Let us look at these objections one by one. First, it is not axiomatic that electricity prices will
increase as a consequence of privatisation. These prices are based on tariffs set out in power
purchase agreements executed by the discom, which would be inherited by its successor entity.
Further, any changes to tariffs would have to be approved by the state electricity regulators.

Second, even if the performance of the Chandigarh discom was adequate, this does not prohibit
privatisation. The government could legitimately believe that privatisation was justified on the
basis that performance would improve and losses would be even lower than at present.

Third, if an appropriate public consultation process was not in fact conducted, this was a
mistake by the government and should be remedied. Public consultations go a long way
towards legitimising such processes, are routinely conducted in similar situations, and might
even be mandated by law in certain cases.

Fourth, any job reservation provisions would only be required if mandated by law and it is not
clear if a successor discom would be bound by such provisions. However, it would be expected
that any the employment of any employees in reserved jobs would be protected through the
privatisation process.

Finally, while ideally the enabling legislation should have been passed in advance, the
privatisation process could have—and might actually have—been made subject to the passing
of the Electricity Amendment Bill, 2020.