By YS.Rana:
CHANDIGARH—Soon in eight Union Territories plug of electricity will be in the hands of private companies as the Central Government has decided to privatize electricity in eight Union Territories including Chandigarh. The Chandigarh Administration has already planned to privatize the distribution of electricity and hired a private company as consultant. Announcement of the central government made it easy for the Administration to go ahead with the plan. It is natural that voice against this decision will be raised especially from the unions. On the other hand, the government pleaded that it would benefit the government and boost electricity generation. Judging from the pronouncement of government privatization is the practical solution to achieve low prices. History suggests privatization of the electricity is not such a bright idea. Prof Sharon Beder, in his book “Power Play: the fight to control the world’s electricity” has given evidence. It provides historical context to the battle between public and private ownership played out over more than 100 years in USA and Britain and the last couple of decades in Australia, Brazil and India.The electricity comprising four sectors—electricity; generation; transmission, distribution and retailers. These sectors will be split into competing firms and spun off. Firms will leverage their market dominance to often blackmail the government if it does not raise prices thereby risking the wider economy. As the electricity is one of the most bailed-out sectors and it does not generate publicity. Years elapse before the public discovers the truth. Beder documented that privatization always results in escalating electricity prices even after total demand is falling.
Much like the privatisation and deregulation of the financial sector that promised choice and efficiency according to pseudo-scientific economic models, it has instead resulted in endless financial disasters, coming after a period of apparent tranquillity. The costs to governments vastly exceed all the costs and problems of public ownership. As Mark Twain observed, history does not repeat itself, but it does rhyme.