Franchisee is a sugar coated pill towards privatisation -- Power Engineers

Posted On: 22-Jul-2010 11:53:28 AM By: Vinod Kumar Gupta Font Size:
Franchisee is a sugar coated pill towards privatisation -- Power Engineers
Franchisee is a sugar coated pill towards privatisation -- Power Engineers

New Delhi: “Franchisee is a sugar coated pill towards privatisation of power sector in the country” said Padamjit Singh

Chairman of All India power engineers Federation.

AIPEF in its federal executive meeting held today noted with extreme concern the ill-advised move by the various state Governments to hand over the creamy area of their states to private franchisee .The move is only to privatize the profits and nationalize the losses. The main argument given in favor of distribution franchise to a private party is that the technical and commercial losses are high and uncontrollable.

Shaliender Dubey Secretary General AIPEF asserted that in those states where the government has understood its obligation and role to support the power sector, the technical as well as commercial losses
have been controlled and consumer service has improved. > These states are Andhra, Karnataka, Gujarat, Tamil Nadu etc. Here in these states the govt. has given administrative support to check energy theft and revenue leakage and further there is no political interference in the day to day working of the power sector.

Padamjit said that In Andhra Eastern Discom the AT&C losses of 12.46% were achieved in 2006-07 while in Karnataka MESCOM the AT&C losses were 12.06% in 2006-07 and both these Discoms are
functioning in the public sector. The bureaucracy, instead of exploiting the power sector for other purposes should lend support on the pattern of the progressive states which will result in overall improvement throughout the state.

The model of franchise adopted in BHIWANDI (Maharashtra) is often quoted as the example of a
successful franchise model. The reputed NGO PRAYAS (Energy Group) which is an independent organization running on professional lines has prepared a report at the behest of Planning Commission of India has observed that in the first two years of franchise while the revenue realized from consumers doubled from Rs 160 crore to Rs 344 crore the revenue actually paid to the state licensee / Discom in (MSEDCL) increased by only 7%. This indicates that 93% of the additional revenue realized by the franchise was pocketed by it and only 7% benefit was passed on to the state Discom. The survey also revealed that large numbers of consumers do not have confidence in franchisees metering and billing systems. High bills and fast meters were common complaints made by consumers during the survey”.

This review highlighted key lacunas in the bidding process for selecting franchisees

AIPEF has requested that instead of introducing urban franchisee state Governments should give the distribution responsibility and management jointly to engineers and workers with the assurance that there will be no political interference and State Governments should give all necessary support to check the electricity theft.
Dubey further said that on the other hand where a state government indulges in political patronage of corrupt elements, patronizing theft and interfering in the day to day administration, the AT&C losses indeed have remained at very high and unsustainable level. These state Governments should study the administration and management of power sector in the states of Andhra, Karnataka, Gujarat and Tamil Nadu.