Haryana CM Nayab Saini Invokes Section 108 to Suspend Private Distribution Licences via HERC

• by Akanksha Mishra
• 2026-10-23 20:53:00

In a dramatic policy intervention to defuse rising industrial tension and address massive public pushback over power sector privatization, the Haryana government has halted the operation of parallel private power distribution licences across the state. Exercising sovereign statutory powers under Section 108(1) of the Electricity Act, 2003, the state administration issued a binding policy directive to the Haryana Electricity Regulatory Commission (HERC) prohibiting the creation, operation, or enforcement of parallel power distribution licences anywhere within state borders. Cleared with the direct assent of Chief Minister Nayab Singh Saini, the executive order effectively freezes the controversial distribution licence granted on October 19, 2026, under petition number 30/2026 to Eleven Power Private Limited (EPPL) for commercial swathes of Gurugram and Nuh districts, areas currently administered by the state-owned Dakshin Haryana Bijli Vitran Nigam Limited (DHBVNL).

Safeguarding Consumer Welfare: Public Outcry and Concerns Over State Discoms

The government's intervention comes in direct response to broad-based public unrest across agrarian and municipal belts:

Widespread Civil Discontent: Following the HERC’s initial licensing order, significant apprehension and protest emerged among agrarian communities, domestic power consumers, trade unions, and state power utility employees who feared steep tariff surges and systemic corporatization.

Discoms' Financial Integrity: State-owned discoms had formally contested the private allocation, raising serious doubts about the private firm's capital adequacy, technical operational readiness, debt-servicing reliability, and its universal supply commitment to service all customer segments across the licensed geography.

Protecting Public Sector Assets: The administration highlighted that allowing private operators to selectively target high-revenue consumers would destabilize the financial balance of state-run power utilities that bear the burden of agricultural and subsidized rural electrification.

Cherry-Picking and Cross-Subsidies: The Economic Fallouts Under Scrutiny

The policy directive submitted to the HERC detailed several structural risks posed by parallel private distribution:

Erosion of Cross-Subsidies: Parallel private operators typically engage in "cherry-picking," serving lucrative industrial and premium commercial accounts while abandoning subsidized rural and low-income domestic users, directly undermining the cross-subsidy architecture that funds concessional power for farmers.

Stranded Liabilities and PPA Costs: The state highlighted that existing state power distribution corporations are locked into long-term Power Purchase Agreements (PPAs); a sudden loss of base-load consumers would leave substantial generation capacities idle, saddles state utilities with stranded asset expenses.

Wasteful Network Duplication: Creating dual, overlapping physical distribution grids in dense zones like Gurugram creates massive infrastructure redundancies, escalates capital expenditure across public thoroughfares, and results in avoidable resource waste.

Exercising Section 108: Saini Government Reasserts Public Interest Authority

The state government utilized overarching statutory powers to enforce its policy primacy over regulatory rulings:

Invoking Section 108(1) Mandate: Under Section 108(1) of the Electricity Act, 2003, state governments hold explicit authority to issue mandatory, binding policy directions to state regulatory commissions on matters involving overarching public interest.

Directives to HERC Secretariat: The state power department directed the Secretary of the HERC to immediately lay the government order before the full commission, instructing the regulatory body not to operationalize or grant legal effect to the EPPL licence.

Resolution of Electricity Workers' Stir: The move delivers on the explicit assurance given by Chief Minister Nayab Singh Saini to striking Haryana electricity employees, whose widespread agitation against privatization ended following government guarantees to protect public sector distribution assets.

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