The biggest anomaly is in the wide divergence that the new proposals have when juxtaposed with the competitive bidding guidelines
The Power Ministrys radical new plan to revamp the electricity distribution sector,which aims at segregating the carriage and content operations of existing distribution utilities (discoms),is likely to be moved as part of several amendments to the Electricity Act 2003 in the upcoming winter session.
The new scheme,being touted as a step towards achieving perfect competition,essentially envisages a separation of the distribution and the retail supply business of the countrys discoms has been proposed,with separate licences likely for each of these functions.
On paper,it does sound good. Effectively,there will be one government wire company (entrusted with all the physical infrastructure such as substations,wires and meters),along with multiple suppliers wheeling electricity over this common grid infrastructure offering power to consumers. But there seems to be some basic pitfalls in this assumption.
One,the discoms,as they operate now,double up as the suppliers of last resort if someone puts in a demand for a connection,the utility is bound to offer it to him. In the new scenario,there is always the danger that if multiple suppliers have a free hand in cherrypicking customers,they would try and corner the same set of well-paying customers but those seen as not remunerative enough including agricultural consumers or domestic users in areas with high loss levels might find no takers.
Also,when a discom is split,a number of coordination activities that were internalised in the operations of the utility including coordination with the grid operator,daily load forecasting,network expansion planing,etc could be left hanging.
The biggest anomaly is in the wide divergence that the new proposals have when juxtaposed with the competitive bidding guidelines issued by the ministry just a couple of months ago.
Under the new DFBOT (design,finance,build,operate,transfer) competitive bidding model,the discoms are ultimately mandated to take over upcoming generation plants after a concession period of 25-years or so is over. But under the carriage-content separation plan,the discoms,as they exist today,could disappear entirely. So the question really is,if the discoms are to be split,who then will take over projects such as the upcoming UMPPs planned in Orissa or Tamil Nadu after the concession period is through?
It might be worthwhile to debate some of these contradictions before finally pushing the new amendments through.
Anil is a senior editor based in New Delhi.
anil.s@expressindia.com
