Will Delhi Model of Discom Privatization Work Elsewhere?

The Government of India’s renewed push for privatisation of distribution companies (DISCOMs) is being pursued through a two-pronged strategy — first, offering states additional borrowing flexibility as an incentive for opting into privatisation, and second, proposing amendments to the Electricity Act to permit multiple distribution licensees operating on the same network without establishing a Distribution System Operator (DSO). Proponents of this approach frequently highlight the Delhi and Odisha experiences as successful templates. However, such claims are only partially accurate and overlook crucial ground realities. Odisha’s first round of privatisation in the late 1990s collapsed due to poor regulatory preparedness, weak governance, and inadequate due diligence on private investors, eventually leading to license cancellation. Its second attempt, now under Tata Power, remains under regulatory scrutiny, with persistent issues of service quality, rural coverage, and financial viability. The Delhi privatisation model, initiated in 2002, is often cited as India’s most successful power sector reform, but its success is rooted as much in context as in corporate efficiency. The unbundling of the erstwhile Delhi Vidyut Board led to the creation of three private DISCOMs—BRPL, BYPL, and TPDDL—operating under a regulated framework, with the Delhi government retaining 49% equity. The transition was supported by substantial government assistance, including the takeover of legacy losses and the provision of ongoing subsidies to protect consumers. High urban density, negligible agricultural demand, a paying consumer base, and dramatic reductions in AT&C losses—from nearly 50% before privatisation to below 10% now—have contributed to reliable supply and improved customer service. The Delhi model is frequently cited as a benchmark for successful power distribution reform. This analysis examines whether that reputation is justified by comparing Delhi’s three private DISCOMs—BRPL, BYPL, and TPDDL—with the neighbouring public utility, Paschimanchal Vidyut Vitran Nigam Ltd. (PVVNL) of Uttar Pradesh. Using FY 2024–25 regulatory and annual filings, the study presents a consolidated comparison across operational, financial, and efficiency parameters. It explores key contrasts in scale, loss levels, consumer mix, and subsidy dependence, particularly in the domestic category, to assess whether Delhi’s apparent success reflects structural efficiency or contextual advantage.

Comparative Efficiency Analysis: Delhi DISCOMs vs PVVNL (FY 2024-25)

Further, the contrast between Delhi’s and Uttar Pradesh’s subsidy and cash-flow mechanisms is striking. In Delhi, subsidies are predictable and often adjusted directly against payments due to state-owned generators like IPGCL and PPCL, effectively reducing the DISCOMs’ working capital needs and ensuring timely settlement of power purchase bills. This financial architecture allows Delhi’s private utilities to operate with liquidity stability and minimal borrowing. In sharp contrast, PVVNL and other UP DISCOMs receive subsidy reimbursements months after accrual, forcing them to rely heavily on short-term loans to pay state GENCOs. With over 65% power sourced from Gencos other than state generators and no direct subsidy adjustment, PVVNL’s finances remain perpetually strained with high interest burden, payment delays, and growing arrears reflecting a systemic liquidity deficit rather than inefficiency in operations. 

Conclusion:
Delhi’s private DISCOMs—BRPL, BYPL, and TPDDL—undeniably perform better than most state-run utilities in areas like loss reduction, billing efficiency, and financial stability. Yet, their success owes as much to Delhi’s unique environment as to privatisation itself. The city’s compact urban area, dense and paying consumer base, negligible agricultural load, and stable political and fiscal support have created ideal operating conditions. Nearly all consumers are metered, the demand is predictable, and political interference in supply decisions is minimal—allowing near-perfect collection efficiency and low technical losses. The Delhi government’s financial strength also ensures timely subsidy payments and targeted benefits, keeping the ecosystem healthy.
Delhi’s DISCOMs enjoy advantages due to favourable uncontrollable factors which include: (1) high per capita income of consumers and high willingness to pay consumers, (2) compact license area with shorter LT networks, (3) absence of subsidized agricultural consumers, (4) generous per-unit subsidies from resourceful (high Tax to GDP ratio) government, and (5) a supportive political environment.

In contrast, public utilities like PVVNL in Uttar Pradesh operate under entirely different conditions—vast rural coverage, high agricultural consumption, lower capacity and willingness to pay, weak cost recovery, and constant political intervention. Chronic losses, ageing infrastructure, and entrenched non-payment habits limit what any operator, public or private, can achieve. This highlights an important truth: privatisation does not automatically translate to efficiency. If private players were placed in PVVNL’s environment—serving dispersed, low-paying, subsidy-dependent consumers under political pressure—their performance would likely mirror that of the public utility.

Ultimately, Delhi’s success is the outcome of both competent management and an exceptionally favourable ecosystem. Acknowledging this, private firms are now advocating for smaller, high-density urban license areas with favourable eco-system and multiple licensees sharing the same network under open access without DSO or any USO. It’s a pragmatic move that recognises the real lesson from Delhi: efficiency thrives where governance and socio-economic environment align, and that replicating this success across India’s diverse, subsidy-dependent landscape will require structural, not just ownership-based, reform. Otherwise, it will be another case of "Profits are Private and Losses are socialized".