Tata Power Co. Ltd-Invests 500 K
The franchisee, which is responsible for supplying power, needs
to maintain the network and manage bill collection. The franchisee is
also responsible for upgrading the distribution network to reduce
technical and commercial losses, including pilferage. According to
Planning Commission data, Jharkhand is one of the states with the
highest ATC losses, pegged at 40%.
"We will be investing Rs.500 crore
in improving the distribution network," said Tata Power's executive
director and chief financial officer S. Ramakrishnan. Of this, Rs.400
crore will be raised through loans under the Restructured Accelerated
Power Development and Reform Programme (R-APDRP) and Rs.100 crore from
internal resources, he said. The company aims to reduce ATC losses to
13% over the next five years.
R-APDRP was launched by the central
government in the 11th Five-Year Plan (200712) targeted at towns with a
population of 30,000 or more with an aim to reduce ATC losses to 15%.
Under the scheme, the central government gives financial assistance to
distribution utilities implementing the scheme through soft loans and
grants.
Tata Power is expected to take over distribution operations in the Jamshedpur circle by mid-2013.
The
franchisee model has gained favour over outright privatization
following the success of Maharashtra state- owned power distribution
company Mahavitaran Ltd implementing this in the Bhiwandi circle.
In
2006, Mahavitaran entered into a franchisee agreement with
Ahmedabad-based Torrent Power Ltd for the power loom town of Bhiwandi
with ATC losses of around 48%. Torrent reduced this to less than 20%.
After
this, power distribution in three other cities in Maharashtra—Nagpur,
Aurangabad and Jalgaon—has been given to franchisees. They have also
introduced in Madhya Pradesh and Uttar Pradesh.
"It is a easy and
quick solution. Outright privatization is a complex exercise as it
involves issues like asset valuation, resistance from employees, general
political opposition, among others," said Kameswara Rao, executive
director and leader of the energy, utilities and mining practice at
audit and consulting firm PricewaterhouseCoopers.
According to Ajoy
Mehta, managing director, Mahavitaran, reduction in ATC losses is a
target for state-owned power distribution utilities, but for the private
operator it is profit. "Our experiment with the franchisee model has
been satisfactory," he said.
"The franchisee model has worked and it
has improved quality of service for average consumer," said Ashwini
Chitnis, senior research fellow at Pune-based thinktank Prayas, which
carries out research on policy issues related to energy sector.
"However, present franchisee agreements are skewed in favour of the
franchisee, so there should be periodic review of the franchisee's
performance and safeguards should be incorporated in the agreement to
protect the interest of general consumers and the state power utility."
In : POWER NEWS