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Journalism of Courage
With rising temperatures and repeated power cuts, even urban consumers and that too in the national capital can be forgiven for having second thoughts over the privatisation of power distribution. Add to that the prospect of further tariff hikes and the situation can become anarchic.
With elections around the corner, the situation is something that the Congress-led government does not require. But that is the politics of power and surely the private power distribution companies do not have a magic wand to reverse a situation that was earlier confronting the Delhi Vidyut Board.
However, with the passage of the Electricity Bill, things are bound to change for the better. Here8217;s why. Market forces of demand and supply will force both the private operators as well the state government, to meet their requirements adequately and efficiently.
At present, Delhi has a peak demand of around 3000 MW, with the state8217;s own resources capable of meeting only around 750-800 MW. It needs to be mentioned that this figure could have been 1000 MW if some of Delhi8217;s units were functioning properly.
In any case, Delhi will have to import from other states to meet the demand. There is surplus power coming in but it is not reaching the consumers because the distribution network is unable to carry the load8212;hence the power cuts. Under the new law, this situation can be prevented through various means.
The first being that the law enables distribution licencees setting up their own power plants/units to meet the demand for power. Currently, distribution companies have to depend on the transmission company for the supply of power. The law also allows new entrants into the distribution business.
If they set up new infrastructure to meet demand, not only will transmission and distribution losses be lower, but will also put pressure on the incumbent distributor to improve services. In addition to this, there will always be additional pressure on any distribution company as the new law imposes a fine on the company if power connections are not granted after a stipulated time frame.
While this would be reassuring to the consumer, it needs to be seen as to how many companies come in. Consumers should not expect overnight miracles, as even in the telecom sector it took a few years before the fruits of competition could be enjoyed.
While the spirit of the new legislation is well understood, loopholes will surface when it is being implemented. A strong regulator with a good understanding of issues will be crucial in ensuring a smooth transition to the new regime. Even under the new regime, it has to be proactive and protect both consumer and investor, because competition can be a double-edged sword which can wipe out investors in no time.
