CCI proposals to reduce power sector tariffs
Ronojoy Banerjee
Posted: Wednesday, Aug 11, 2010 tor wants import tariffs on power equipment to be scrapped and Delhi’s two monopolistic power distribution companies—BSES and NDPL—to feel the heat of competition. Further, it intends to divest municipal bodies of their exclusive right to develop urban slums and let private real estate players enter this area through a competitive bidding process.

In its wide-ranging recommendations set to be issued to the Planning Commission for the National Competition Policy (NCP), the Competition Commission of India (CCI) is understood to have stuck to the principle that policies that quarrel with the consumer’s right to a fair deal would need to go.

If CCI’s proposals find their way to NCP, it would have the potential to change not only many extant government policies, but also the remit of many sectoral regulators. What makes the NCP less threatening to the regulators is, of course, the fact it lacks a statutory backing.

Under the Competition Act, CCI has powers to act against anti-competitive agreements and abuse of dominant position. It is also expected to soon get the powers to regulate mergers and acquisitions that can have an adverse effect on competition in the relevant geographical markets. The NCP will represent the overarching framework under which CCI would operate.

The commission had earlier cracked down on the National Capital Region’s two power discoms—Anil Dhirubhai Ambani Group’s BSES and the NDPL (a joint venture of Tata Group and the Delhi government)—for not allowing the consumer to instal the meter of his choice. The regulator said the two discoms with monopolistic presence in their respective areas were abusing their dominant position.

“Through these recommendations, we are looking to cover a wide plethora of subjects. For instance, electricity is a major consumer concern and if only a handful of players get to supply it, then there could be a significant case for abuse of dominance...we hope to change that,” a CCI official said on conditions of anonymity.

Scrapping the import tariff on power equipment would hit domestic major Bhel and benefit Chinese equipment suppliers, even as it would reduce the cost of power to the consumer.

“Any import duty could increase the cost of power, hurting consumers,” the CCI official said. The government is on the verge of imposing a 10% duty on ultra-mega power equipment. It is estimated that the duty would result in Rs 1-3 increase in the cost of power per unit.