Power sector reform can be fiscally necessary and administratively overdue. In Punjab, however, it will be judged by a single test: do the contracts protect the public interest as firmly as they protect private returns?
Punjab is again being asked to accept a new distribution framework through the consultation on the Draft Electricity (Amendment) Bill, 2025. The pitch is familiar. Competition will improve service, curb losses and stabilise stressed utilities. Punjab’s worry is equally familiar.
Competition may end up privatising predictable profits while socialising the hardest obligations, such as rural supply, subsidies and network upkeep. As consultations unfold, stakeholders will line up to shape the narrative. If Punjab engages, it must do so as a negotiation over enforceable duties, cash flow discipline and accountability, not as a referendum on ideology. Why the street is restless
The resistance from power engineers and employees’ organisations, joined by Kisan and farm labour unions, is not mere political theatre. It reflects a practical fear. Once multiple players arrive, accountability can blur, and the public utility can be left holding liabilities that nobody wants, but everybody needs to be handled.
Farmers read the draft through one lens, the certainty of supply. Uncertainty in power quickly becomes uncertainty in crops, incomes and law and order. Engineers and staff read it through another lens, system integrity. Distribution is not an app. It is a grid that must be maintained, upgraded and restored in real time.
Punjab’s distress has never been only about free power. Weak measurement, especially where consumption is estimated rather than metered, creates room for inflated narratives and blurred responsibility. When losses are not pinned down feeder by feeder, theft control and enforcement turn into arguments over numbers rather than performance.
Any reform that changes licences but does not harden measurement, energy auditing and loss accountability will not fix the core leak. It will merely rearrange blame.
Competition can improve consumer-facing performance, such as billing, complaint handling and pressure to reduce losses. But competition also chases profitable consumers and avoids political risk unless rules compel otherwise.
Punjab should therefore treat reform as a design problem, not a moral argument for or against the private sector. The state’s job is to decide in advance which outcomes are non-negotiable. Reliability, universal access, rural continuity and financial transparency must then be translated into enforceable licence conditions and contracts.
The poles-and-wires question Electricity is not a commodity business. It is a network business. The decisive question is not who sells power, but who maintains and upgrades the wires.
If private suppliers use the existing network while the public utility remains the default maintainer, storm restorer, theft controller and capital expenditure spender, Punjab will inherit an ageing grid and a shrinking revenue base.
Any reform worth the name must therefore settle upfront who pays for routine maintenance, who funds upgrades for load growth, who replaces failed transformers, who responds within defined time limits to breakdowns, and how penalties are imposed when service standards slip. Without that clarity, consumer choice becomes a slogan riding on public infrastructure.
Punjab’s most explosive issue is subsidy settlement. In a multi-licensee or privatised setting, subsidy stops being a budget line and becomes a payment system. Who receives it, whether the legacy utility, a private distributor or the consumer through direct benefit transfer, and what happens when it is delayed, are central questions.
The scale is large. For FY 2024–25, Punjab’s power subsidy is widely estimated at about Rs 21,900 crore. This includes roughly Rs 10,000 crore for agriculture and about Rs 8,800 crore for domestic categories meant to protect economically and socially vulnerable households. Under the law, such subsidies are meant to be funded in advance as specified by the regulator.
In practice, advance payments are frequently late. The predictable result is that Powercom borrows working capital to keep supplies flowing, and interest costs become the hidden tax on delayed fiscal transfers.
Delhi offers a cautionary parallel. Even where privatised distribution improves day-to-day operations, funding gaps and postponed tariff realism can reappear as regulatory assets, deferred burdens parked for later recovery with carrying costs. Punjab’s political economy is less forgiving. If cash stress translates into feeder-level disruption, rural confrontation can follow quickly.
That is why subsidy settlement must be hard-wired through escrowed payments, DBT-linked settlement or regulator-controlled disbursement schedules with automatic consequences for delays. The PPA lesson
Punjab has already learnt that contracts outlive governments. For years, the current ruling party attacked earlier regimes over power purchase agreements with private thermal plants, focusing on fixed charges payable even when drawal was low. Once in the office, cancellation proved far harder than slogans suggested because termination triggers penalties, arbitration, and lengthy litigation.
The lesson is structural. When drafting is watertight, political anger is irrelevant. Punjab should therefore draft every new distribution instrument as if it will be tested in court, because it will be. A Punjab-first outcome Punjab does not have to choose between blind resistance and blind endorsement. It can insist on one fairness rule. Responsibilities should follow revenues. If a player earns from consumers, that player must share network obligations and be accountable for reliability, loss outcomes and consumer protection. If the state funds subsidies, the payment pipeline must be engineered so the utility is not forced to borrow to bridge predictable delays.
A final word on narrative. The national move to open civil nuclear energy to private participation will be cited rhetorically as proof of reform. Punjab can disarm such arguments only by ensuring its own power reforms are drafted and enforced so tightly that the charge of privatising profits finds no foothold in the fine print. (The writer is a former special chief secretary, Punjab)