New Delhi: The unease with the reforms in power distribution which shifted the monopoly from a governmentowned utility to private players is showing.
With very little to write home about on improved service quality, the finance ministry has put the first foot in the door to rework the electricity distribution model and it is suggesting ushering in competition for the existing players.
North Block’s proposal, which is still on the drawing board—only preliminary discussions having started—also calls for changes in the way the distribution companies (discoms) operate.
It envisages city transmission companies, which will buy power from a state transco and will be responsible for wheeling electricity for discoms. The discoms will then purchase power from the city transco and will be responsible only for last-mile connectivity—from the pole in front of your house to the meter. The consumer will have the choice to select one of the many that would be allowed to compete.
If the move goes through, the discoms in their new avtaar will be responsible only for the supply over a few metres apart from billing and collecting the dues.
The power to manage load and maintain transformers will be transferred to the city transco.
The finance ministry hopes that the move will improve service quality as consumers will have more choice when it comes to discoms. While it envisions at least two players to begin with, it expects the field to expand to include more. Also, parallel infrastructure—in terms of electricity wires, poles, substations and transformers—may not be required.
But the power ministry is said to be not too enthused with the idea. When contacted, power secretary R V Shahi said he was not aware of the proposal. North Block officials, however, said the idea has been discussed.
“Besides, the law provides for ushering in competition. How and when it will be done is not known. The model we are suggesting can be refined and turned even more consumer-friendly,’’ an official said.
Shahi too said that the law provides for ending the monopoly and the government had already decided to allow open access for those consuming over one mega watt power from companies other than the discom in the locality.
The Electricity Act, 2003, and the National Electricity Policy provide for multiple discoms in a district or a municipal corporation, for which the state regulators are authorised to fix the tariff and connection charges.
SWITCH OFF
Power unit generates electricity and sells to the grid
From the transmission line the power goes to the transco
Transco then sells power to city transco, which wheels electricity for discoms
Discoms will only provide last mile access from the pole to the end user and will be responsible for billing and collection
Ministry seeks nod for 24% PFC float
New Delhi: With disinvestment on hold, the power ministry has sought Cabinet approval for issuing up to 24% fresh equity by Power Finance Corporation in its initial public offer as against 10% decided earlier.
“The Power Ministry has moved a Cabinet note that seeks clearance for fresh equity by PFC in the IPO,’’ a government source said.
The source said the proposal was an enabling provision to issue up to 25.7 crore share. But PFC would initially hit the stock market to raise its equity base by only 10%, amounting to 10.3 crore shares, he said.
When contacted, power secretary R V Shahi confirmed circulating the note to the Cabinet, but did not give details.
“We have moved the Cabinet note. The IPO will happen within this financial year,’’ Shahi said.
The note is in contrast to the earlier proposal approved by the Cabinet in January, which included issue of 105 fresh equity along with sale of 5% equity stake by the government.PFC, which had filed the draft prospectus with the Securities and Exchange Board of India in June to offer 15.45 crore equity shares, would now have to submit a revised prospectus to the market regulator after it gets the Cabinet nod.
With very little to write home about on improved service quality, the finance ministry has put the first foot in the door to rework the electricity distribution model and it is suggesting ushering in competition for the existing players.
North Block’s proposal, which is still on the drawing board—only preliminary discussions having started—also calls for changes in the way the distribution companies (discoms) operate.
It envisages city transmission companies, which will buy power from a state transco and will be responsible for wheeling electricity for discoms. The discoms will then purchase power from the city transco and will be responsible only for last-mile connectivity—from the pole in front of your house to the meter. The consumer will have the choice to select one of the many that would be allowed to compete.
If the move goes through, the discoms in their new avtaar will be responsible only for the supply over a few metres apart from billing and collecting the dues.
The power to manage load and maintain transformers will be transferred to the city transco.
The finance ministry hopes that the move will improve service quality as consumers will have more choice when it comes to discoms. While it envisions at least two players to begin with, it expects the field to expand to include more. Also, parallel infrastructure—in terms of electricity wires, poles, substations and transformers—may not be required.
But the power ministry is said to be not too enthused with the idea. When contacted, power secretary R V Shahi said he was not aware of the proposal. North Block officials, however, said the idea has been discussed.
“Besides, the law provides for ushering in competition. How and when it will be done is not known. The model we are suggesting can be refined and turned even more consumer-friendly,’’ an official said.
Shahi too said that the law provides for ending the monopoly and the government had already decided to allow open access for those consuming over one mega watt power from companies other than the discom in the locality.
The Electricity Act, 2003, and the National Electricity Policy provide for multiple discoms in a district or a municipal corporation, for which the state regulators are authorised to fix the tariff and connection charges.
SWITCH OFF
Power unit generates electricity and sells to the grid
From the transmission line the power goes to the transco
Transco then sells power to city transco, which wheels electricity for discoms
Discoms will only provide last mile access from the pole to the end user and will be responsible for billing and collection
Ministry seeks nod for 24% PFC float
New Delhi: With disinvestment on hold, the power ministry has sought Cabinet approval for issuing up to 24% fresh equity by Power Finance Corporation in its initial public offer as against 10% decided earlier.
“The Power Ministry has moved a Cabinet note that seeks clearance for fresh equity by PFC in the IPO,’’ a government source said.
The source said the proposal was an enabling provision to issue up to 25.7 crore share. But PFC would initially hit the stock market to raise its equity base by only 10%, amounting to 10.3 crore shares, he said.
When contacted, power secretary R V Shahi confirmed circulating the note to the Cabinet, but did not give details.
“We have moved the Cabinet note. The IPO will happen within this financial year,’’ Shahi said.
The note is in contrast to the earlier proposal approved by the Cabinet in January, which included issue of 105 fresh equity along with sale of 5% equity stake by the government.PFC, which had filed the draft prospectus with the Securities and Exchange Board of India in June to offer 15.45 crore equity shares, would now have to submit a revised prospectus to the market regulator after it gets the Cabinet nod.