New Delhi, May 16 (IANS): The government has decided to privatise the power distribution sector in Union Territories to set a model for adoption of similar reforms initiatives in states.

Announcing the structural reform initiatives as part of the Rs 20 lakh-crore economic package, Finance Minister Nirmala Sitharaman said privatisation of power distribution would be carried out completely involving all power departments and utilities.

Power distribution in the Union Territory of Delhi had already been privatised. This experience will be shared with other Centre-governed territories to carry forward privatisation.

The existing electricity legislation mandated unbundling in the power sector to corporatise it, dividing power generation, transmission and distribution segments. This has happened in most states, but privatisation is moving slowly.

The government's latest move is on account of sub-optimal performance of power distribution and supply.

It is expected to lead to better service to consumers and lead to improvement in operational and financial efficiency in distribution.

It will also provide a model for emulation by other utilities across the country.