Franchisee model needed in 255 towns’
Yogindra Mohan

Patiala

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

Sources in the power sector told Daily Post that the franchisee system which has been introduced in selected cities in Maharashtra and Uttar Pradesh should be extended to 255 towns of the country which accounts for 40 per cent of power consumption. There are 43 towns 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) Jalandhar (9234354 consumers), Mohali, Patiala (112270 consumers) Bathinda (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.

The franchisee model envisages carving out urban areas with a demand of at least 400 MW and a consumer base of over one 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 per cent.

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.

The chairmen and directors should be appointed for a minimum tenure of three to five years and should be selected by a high level committee headed by the Chief Secretary on the basis of merit and open selection.