The Electricity Department of the Union Territory (UT) of Lakshadweep has invited bids to acquire its distribution company (DISCOM) responsible for electricity distribution and retail supply.

The last date of submission of bids is March 28, 2022. The pre-bid meeting will take place on January 24.

As a bid security deposit, bidders must furnish ₹300 million (~$4.02 million). The cost of the tender document is ₹500,000 (~$6,703).

According to the tender notice, the selected bidder will also be responsible for developing clean energy projects.

In May 2020, the Government of India proposed to privatize DISCOMs in the union territories. DISCOMs in the union territories come under the administration of the central government while respective state governments govern those in the states. The UTs are Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi, Jammu and Kashmir, Lakshadweep, Ladakh, and Puducherry.

The government’s program to privatize DISCOMs to bring efficiency in the distribution sector has invited legal challenges with public interest litigations filed in the courts. In November 2021, the Union Cabinet approved the formation of a special purpose vehicle to privatize the electricity distribution business in the UT of Dadra & Nagar Haveli and Daman & Diu and the sale of equity shares of the new company to the highest bidder.

The Cabinet decision came months after the Supreme Court lifted the stay imposed by the Bombay High Court on the DISCOM privatization process, according to the update provided to the Bombay Stock Exchange by Torrent Power.

In January 2021, the Supreme Court of India issued orders placing a hold on a stay order given by the High Court of Punjab and Haryana on the privatization of Chandigarh’s DISCOM.

NITI Aayog, in its report, stated that higher private participation in distribution holds out the possibility of greater efficiency. Odisha and Bhiwandi in Maharashtra, where higher private participation took place, saw rapid improvements in metering, billing, and collection.

Privatization of DISCOMs is viewed as critical to reforming the distribution utilities, many of whom are in poor financial health and owe power generators massive sums in overdue payments. The overdue amount owed by DISCOMS to power generators at the end of December was ₹1.007 trillion (~$13.50 billion).