Shunglu panel- Franchisee in 255 towns for solvency of power sector
Vinod Kumar Gupta, 24-Dec-2011
Shunglu panel- Introduce Franchisee in 255 towns for solvency of power sector

Saturday December 24, 2011

Chandigarh

The introduction of the franchisee model in 255 towns across the country on an urgent basis is essential for solvency of power sector, recommended Shunglu panel.

The franchisee system which has been introduced in selected cities in Maharashtra and Uttar Pradesh should be extended to 255 towns of country which account for 40 % of power consumption. There are 43towns in Andhra Pradesh 13 in Karnataka, 29 in Maharashtra and 33 towns of Punjab and Haryana. Which are listed for introduction of franchisee system? This is the precondition for making available financial assistance through special purpose vehicle to state Governments or Distribution utilities.

In Punjab Ludhiana (403401 consumers) Amritsar (269219 consumers) Jullundur9234354 consumers), Mohali, Patiala (112270 consumers) Bhatinda (66348 consumers) and Gobindgarh (60677 consumers), Khanna (103099 consumers) are amongst the list of 16 towns. The other towns are Batala, Phagwara, Abohar, Kapurthala, Hoshiarpur and Moga.

In Haryana Faridabad ( 300066 consumers ) Gurgaon ( 175878 consumers) Yamunanagar ( 110668 consumers)Panipat ( 70259 consumers) ,and Rohtak ( 89143 consumers ) are amongst 17 towns of state. Others are Hissar, Bhiwani, and Ambala cantt. , Ambala city, Sirsa, Panchkula, Kurukshetra and Rewari.

The franchisee model envisages carving out urban areas with a demand of at least 400 MW and a consumer base of over 1 lakh with energy consumption of 2000 million units per annum. The panel thinks it would be possible to bring down line losses in a period of three to four years from the present level to 18 %.

This is crucial to radical loss reduction and essential for solvency of power sector by the end of next plan. In franchisee model the Franchisee is not expected to pay anything upfront as he works as an agent of licensee. He will use all the assets of licensee. The franchisee will gain from losses reduction and operational efficiency. To make investment in power sector franchisee should be allowed to take away assets created by him.

Further Distribution companies should be made independent free from political pressure. The practice of appointing part time chairman of all the companies who happens to be busy extremely busy official must cease. In number of state Chief Secretary or Energy Secretary is chairman of companies for year together. The Chairman and directors should be appointed foe minimum tenure of three to five years and should be selected by a high level committee headed by Chief Secretary on the basis of merit and open selection. The selection committee should include representative of public service commission CERC, IIT, IIM and a nominee of Government of India. There must be two non-executive technical members.