Why U.P.’s latest privatisation bid has a brighter chance of success

After several failed attempts in over the last one decade, the Uttar Pradesh government is making a renewed push to privatise its ‘loss-making’ power distribution companies.
This time, however, the plan, it is believed, is more likely to succeed—not just due to strategic reform proposals, but also because senior trade union leaders, a major source of resistance, are constrained by a pending public interest litigation (PIL) petition in the Allahabad high court.
With the court warning against strikes and the litigation unresolved, the opposition to privatisation has been significantly muffled, creating a rare window of opportunity for the government and the UP Power Corporation Ltd (UPPCL) management.
Unlike earlier efforts that faced fierce opposition and abrupt backlashes, the current government has pre-emptively tackled potential roadblocks. By floating the proposal in the media well in advance, the shocking element that fuelled unrest in previous attempts has been significantly reduced.
Moreover, authorities have engaged in prior consultations with power sector employees, assuring them of job security and stable service conditions in the five private entities proposed to be carved out of the loss-making Varanasi and Agra discoms. This strategic dialogue process aims to garner employee support while minimising resistance.
Another important shift in the strategy this time is targeting only loss-making areas for privatisation, avoiding the cherry-picking of profit-making zones by private companies. The new policy mandates that private players cater to both urban and rural consumers, addressing long-standing inequities.
Earlier bids, for example in 2013 and again in 2018, sought handing over of profit-making areas and that only urban ones such as Ghaziabad, Noida, Kanpur, Lucknow, Varanasi etc to private houses and this used to cause resentment among employees.
Timing may also play a crucial role in this effort. Launching the initiative in winter, when electricity demand is lower, minimises the potential public fallout from any disruption caused by employee strikes if they resort to it at all.
This contrasts sharply with some previous attempts made during high-demand summer months, which triggered widespread public discontent forcing the government to enter into a truce with employee unions.
Most significantly, senior trade union leaders, a major source of resistance in the past, find themselves hobbled by a PIL pending in the Allahabad high court since March 2023. The pending court case has restricted their ability to call strike against the proposed move in which the UPPCL aims to enter into a partnership with private players.
In March last year, the Allahabad high directed the government to withhold one month salary/pension of 28 office-bearers of Vidyut Karmchari Sanyukt Sangharsh Samiti (union) which had called for a strike in February.
The bench of Justice Pritinker Diwaker and Justice SD Singh passed the order while hearing an application moved in connection with the PIL by advocate Vibhu Rai, after power employees went on strike.
The court cautioned power employees to remain mindful of any such act (strike) in future that may force the court to take stern action against all those involved.
On the issue of strike by department staff, the court observed: “As a result of such callous conduct orchestrated by the Vidyut Karmchari Sanyukt Sangharsh Samiti, vast disruptions were caused involving serious difficulties faced by citizens and others to maintain essential services like running of hospitals, petrol pumps, institutions, businesses and banking, besides sudden difficulties to students preparing and appearing in various examinations.”
“Repeat actions will invite consequences in law,” the court warned. Earlier, on March 17, the same court initiated contempt proceedings against power employee’s union leaders and issued bailable warrant against them for going on strike despite a previous order of the court for not disrupting the power supply.
“The PIL is not disposed of yet because of which we are compelled not to call a strike, and the management and the government are taking advantage of our weakness,” a senior trade union leader said requesting anonymity.
“The UPPCL is not allowing the PIL to be disposed of by ensuring that its lawyer remains absent on the court on the date of PIL hearing,” he alleged.
Little wonder, though power employees are daily expressing their protest against the proposed move of privatisation, they are consciously avoiding warning of a strike or agitation even as the UPPCL is coming up with new plans every day with a confidence not seen after the trifurcation/unbundling of the then UP State Electricity Board (UPSEB) in 2000.
While preferring not to comment on the PIL issue, UPPCL chairman Ashish Goel said, “We are moving on reforms in a strategic and calculated manner. We are hopeful that efforts will yield the desired results this time.”
“We are also hopeful of getting employees cooperation because we are not privatising the power distribution but trying to enter into a partnership with private entities with the UPPCL to have 49% stakes in the new five entities to be carved out of the two government-owned and loss-incurring DISCOMS-Purvanchal (Varanasi) and Dakshinanchal (Agra),” he added.