Lucknow: The Uttar Pradesh Power Corporation Ltd (UPPCL) has ignited a firestorm with its recent proposal to privatise two of its most loss-making power distribution companies (discoms) – Dakshinanchal (Agra) and Purvanchal (Varanasi).
This decision, framed by the government as a step toward efficiency and reform, has triggered fierce resistance from employee unions, opposition parties and consumer advocacy groups. As the debate unfolds, it lays bare the complexities of privatisation, the apprehensions of stakeholders and the underlying political and economic dynamics.
Shailendra Dubey, chairman of the All-India Power Engineers’ Federation and convenor of the UP Sanyukta Sangharsh Samiti, has become a vocal critic of privatisation. He stated the government’s move was not reform but the “imposition of a failed model”.
‘Privatisation will lead to mass layoffs, higher electricity rates’
The unions argue that privatisation will lead to mass layoffs, higher electricity rates and the cherry-picking of consumers whereby industrial users and not domestic and agricultural customers would be benefited.
Dubey pointed to the high cost of power purchases as the primary reason for the UPPCL’s deficits. Uttar Pradesh generates approximately 5,000 MW of its nearly 30,000 MW demand, relying heavily on private sector purchases at high prices. This inefficiency, compounded by two decades of bureaucratic mismanagement, has burdened the state’s discoms, he said.
He added that the unions’ proposed alternative is that they are willing to take over poorly performing divisions under conditions similar to private companies, promising to outperform them in a year.
Despite assurances from the UPPCL that the move is a public-private partnership and not an instance of outright privatisation, unions dismiss this as deceptive semantics.
As Dubey noted, “When 51% equity is held by the private sector, it is privatisation. Management and policy decisions will ultimately favour private interests.”
The privatisation debate has also become a political battlefield. Samajwadi Party president and former chief minister Akhilesh Yadav has accused the BJP government of using privatisation as a means to exploit public resources for private gain.
Yadav alleged that this initiative will not only result in higher tariffs but also lead to widespread layoffs and contractual hiring, benefiting contractors and private companies at the cost of workers and consumers.
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“After electricity, who knows? Water is next in line for privatisation,” Yadav alleged, adding that the BJP’s governance was driven by exploitation rather than public welfare.
He also criticised the BJP for allegedly failing to enhance power generation, transmission or distribution despite its long tenure in the state.
Ajay Rai, president of the Uttar Pradesh Congress, echoed these sentiments, saying that privatisation would impose an economic burden on the public. Rai pledged strong opposition to the move, calling it harmful to the common person.
Meanwhile, Avadhesh Kumar Verma, chairman of the UP Power Consumers’ Forum, raised concerns about social justice, particularly the impact on Dalit and backward-class employees who may lose reservation benefits in the transition to private management.
Privatisation is unnecessary, Verma said, pointing to the UPPCL’s outstanding dues. Opposing the proposed privatisation of the Agra and Varanasi discoms, he highlighted that the UPPCL currently faces a total loss of Rs 1.1 lakh crore. At the same time, outstanding electricity bills from consumers for the financial year 2023-24 amount to Rs 1.15 lakh crore.
“If the government focuses on recovering the pending dues, it will not only cover the losses, but generate a surplus of Rs 5,825 crore. This makes privatisation completely unnecessary,” Verma stated.
The push for privatisation comes in the shadow of a 2023 Allahabad high court directive cautioning power employees against strikes. The court, which had penalised union leaders for a previous strike, warned of “stern action” for repeat violations.
This judicial stance has emboldened the government to adopt a harder line. In a preemptive measure, the state invoked the Essential Services Maintenance Act to ban strikes for six months, threatening strict penalties for non-compliance.
The Wire reached out to Ashish Kumar Goel, chairman of the UPPCL, for his response. Despite multiple attempts to contact him via phone, he did not answer. An email was also sent to him with questions about the implications of privatisation on employment and power tariffs, but no reply was received.
Meanwhile, an unsigned press note from the UPPCL claimed that the reforms aim to develop Uttar Pradesh into a “modern and efficient” power hub.
The government asserts that private partners will be legally bound to avoid layoffs and improve power generation, renewable energy use and infrastructure development.
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Critics of privatisation and employee unions argue that private companies prioritise profit over public welfare. They cite examples from Odisha, where they say private firms received subsidies while delivering subpar services to rural areas. The Greater Noida power discom, managed privately, also provides minimal electricity to rural consumers, they said, raising fears of similar outcomes elsewhere in Uttar Pradesh.
Proponents of privatisation counter that it could reduce corruption and inefficiency in government-managed discoms. However, as Dubey highlighted, systemic issues such as electricity theft often stem from high-level management complicity, not field-level employees.
The implications of privatisation extend beyond economics. Verma’s warning that it undermines social justice underscores the broader societal stakes. The unions argue that privatisation could erode public accountability, weaken labour protections and disrupt the reservation system, exacerbating inequalities.
Employee and labour unions unite to support electricity employees against privatisation
As the state braces for protests, including a massive “bijli panchayat” in Lucknow on December 22, the discourse on privatisation is far from settled. Employee unions, buoyed by public support, vowed to resist what they perceive as a flawed and unjust model. Opposition parties are seizing the moment to challenge the government, framing the issue as emblematic of broader mismanagement and misplaced priorities.
The UPPCL’s attempts to placate dissent with FAQs and assurances have largely failed to convince stakeholders. Without transparent communication and tangible guarantees, the mistrust surrounding privatisation is unlikely to dissipate.
As many as 27 employee and labour unions have united to support electricity employees against the proposed privatisation of the two discoms by the UPPCL.
Apprehensive about the proposed privatisation, government employees have raised concerns that this move could pave the way for the privatisation of other critical public sectors.
Afeef Siddiqui, a leader of the Uttar Pradesh State Employees Federation, warned that if state employees failed to resist the privatisation of the electricity department, other departments like the Public Works Department could also be handed over to private entities.
“The government has already initiated backdoor privatisation by hiring employees on a contractual basis instead of providing permanent employment. This is a deliberate attempt to weaken public institutions and prepare them for privatisation,” Siddiqui stated.
