Government of Chhattisgarh by its order No/F-21/09/2015/13/2 -Energy Deptt, while using the powers vested under Section 18 read along with Section 14 of Companies Act 2013, has permitted all five power companies, viz, Chhattisgarh State Power Holding Company Ltd, Chhattisgarh State Power Generation Company Ltd, Chhattisgarh State Power Transmission Company Ltd, Chhattisgarh State Power Distribution Company Ltd and Chhattisgarh State Power Trading Company Ltd, for their conversion from public companies into private companies.
As per the provisions laid under Section 18 of Companies Act 2013, under the circumstances that all these five power companies on being converted into Private Company from Public Company, there will be no adverse effect or change as such in the position of present ownership, liabilities, responsibilities, loans and contracts.
The order further directed the officials concerned to initiate necessary proceedings regarding registration of all these five companies as per the provisions laid under Company Act 2013. The order was issued dated October 25, 2016 by M S Ratnam, Special Secretary, Energy Department, Government of Chhattisgarh, in the name of the Governor.
It is worth mentioning here that the state government had reconstituted the erstwhile Chhattisgarh State Electricity Board (CSEB) into five companies Chhattisgarh State Power Holding Company Ltd, Chhattisgarh State Power Generation Company Ltd, Chhattisgarh State Power Transmission Company Ltd, Chhattisgarh State Power Distribution Company Ltd and Chhattisgarh State Power Trading Company Ltd, with effect from January 1, 2008 while exercising the powers vested under Chhattisgarh State Electricity Board Transfer Scheme Rule 2010.
Meanwhile, the 13 odd workers and officers' unions are up against the state government over the decision to privatize the five companies. They are opining that it is the state government's first step towards handing over the power companies to private sector. They stated that initially the government will be managing the affairs but at a later stage they disinvestment process will be
Refuting the charges that the power companies are being privatized, Chhattisgarh State Power Holding Company maintained that the five power companies are functioning under the Energy department which include Chhattisgarh State Power Holding Company Ltd, Chhattisgarh State Power Generation Company Ltd, Chhattisgarh State Power Transmission Company Ltd, Chhattisgarh State Power Distribution Company Ltd and Chhattisgarh State Power Trading Company Ltd. A decision has been taken to convert all these public companies into private limited companies.
The step has been taken in order to avoid compliance of some new mandatory formalities. It further stated that the compliance of such formalities will increase establishment cost and further will become burden for consumers as the cost will reflect in power bills. Elaborating the mandatory formalities, the Holding company informed that being a public limited company, formalities like appointment of independent Director, appointment of a woman Director, constitution of audit committee and remuneration committee, etc has to be complied with for every company which will increase establishment cost. However, these formalities are not mandatory for a private limited company. The Holding Company further clarified that a company holding cent percent government equity can also become a private limited company. It stated that the principal difference between public and privately held companies is that public companies have shares that can be publicly traded on a stock market, which is not possible in a private limited company. However a privately held company might become a publicly held company by conducting an initial public offering, which is the offering of shares of the company to the public. It also stated that converting public limited companies into private limited companies will help into its operations.
Meanwhile, in his reaction, Congress leader Ramesh Warlyani termed the government initiative as step towards privatization of power companies. He questioned if the government initiative will lead to lowering of power tariff over next two months providing much needed respite to the masses. He said, State Government has actually gone ahead to make public power companies into private power companies just to be able to get rid of all the elements that help increase efficiency of power companies.
Source - Hitawada