New set of reforms: Discoms’ roles to be redefined, multiple private franchises in each area to recover full tariffs

The government has drawn up plans to address the issue of lack of competition in the electricity distribution segment by allowing multiple private franchisees in each area, while state-run utilities will continue to own the network.

Though the model falls short of outright privatisation, the power ministry feels that light-handed regulations and partial pricing freedom might make it attractive to private players, while the loss-making government discoms will benefit from upfront guaranteed payment for the power drawn by the franchisees and the use of the distribution infrastructure.

Though the franchisee model has been tried in states like Maharashtra, Odisha and Rajasthan, it hasn’t made much headway; the new model, the government thinks, is more workable given the pricing freedom and various incentives being offered for the operators to meet operational parameters like elimination of pilferage and theft.