The Centre’s proposed amendments to the Electricity Act, 2003, aim to strengthen the franchisee model in the power distribution segment. A new article in the Economic and Political Weekly argues that it is a push for privatization in the hope to cut procurement and operation costs for financially distressed distribution companies. But the article says such a goal may not be met.
Under the franchisee model, state-owned discoms, or distribution companies, would maintain the wires and infrastructure, and a sub-licensee, presumably from the private sector, would supply electricity to consumers.
Authors Tejal Kanitkar, Sudha Mahalingam, and R. Srikanth argue that it is not the discoms but the central government that has been responsible for the high cost of power procurement in the first place.
