The virtual monopoly of the Maharashtra State Electricity Distribution Company (MSEDCL) around the state and of the BEST in Mumbai’s island city over power distribution will be challenged by the entry of private players like Adani and Torrent into the sector, generating mixed response.
The most obvious reaction is that the consumers, both domestic and commercial of industrial, will have a wider choice of selecting their power distributor. This will lead to improved efficiency and service quality. This fundamental transformation has been experienced by the nation in the case of mobile telephony. Owing to the excellent management, the private players have literally driven the government-owned Bharat Sanchar Nigam Limited (BSNL) and its sister concern, MTNL, out of competition. It is generally believed that private companies bring greater efficiency and inject investments in infrastructure development. Hence, the same is expected to happen in the electricity supply sector and lead to reduced transmission and distribution losses.
On the other hand, there are some legitimate concerns, too. For instance, for a power consumer, the basic consideration is the tariff. Apprehensions have been expressed that the private players will jack up the tariffs, especially if they resort to lure high revenue bult consumers and ‘profitable’ areas like Mumbai, Pune or Nagpur.
This issue has gained traction after applications by MSEDCL, Adani and Torrent power distribution companies. Preliminary hearings on them are scheduled to be held before the Maharashtra State Electricity Regulatory Commission (MERC), which can grant or reject the applications, prescribe tariffs for a specified period and draw as Standard Operating Procedure (SOP) manual for the applicants.
For MERC, certain vital regulatory Issues will have to be tackled by it. These will mostly concern the power purchase agreements (PPAs) and ensuring fair competition by reassuring both, the consumers and the operators. For the state government, it will be a serious challenge to balance the rural versus urban conflict, especially in view of the heavy discounts granted to the farm sector in consumption of power for irrigation purposes. Similarly, improving rural network infrastructure and supply quality will be a political urgency.
In short, the regulatory framework and its implementation will be crucial to ensure that this dose of privatisation finally benefits the consumers and the nation.
The state-owned MSEDCL presently supplies electricity to some parts of Mumbai’s eastern suburbs and the rest of Maharashtra but not in the island city of Mumbai. Now it is seeking permission to supply from Colaba in the south tip to Dahisar, the northern-most suburb. It also aims to supply to areas under the Mira-Bhayandar municipality, which is just outside Mumbai’s civic limits.
Supply of electricity to Mumbai island city is under the BEST, Tata Power and Adani Electricity. MSEDCL may become the fourth supplier, depending upon MERC’s verdict. Whatever happens, the consumers will have more options.
MSEDCL’s application for Mumbai and its suburbs is considered a counter to Adani’s presence in the metropolis. MSEDCL currently serves 31.70 million customers across 457 urban areas and 41928 villages in the state. It has 4230 power sub-stations, 25000 high-voltage feeders, 960,000 distribution transformers, 364,000 km of 11 kV lines, and 51771 km of 33 kV lines. MSEDCL supplies around 26000 MW electricity to the state daily, while Mumbai’s current requirement is 4000 MW.
Mumbai and Mumbai Metropolitan Region (MMR) are witnessing rapid development due to huge infrastructure projects like expressways and Metro Rail network. This has improved connectivity dramatically, resulting in residential, commercial and industrial expansion. So is the IT sector’s growth. Hence, the need of more power is felt day in and day out.
Subject to clearances from the Forest Advisory Committee of the Union Environment Ministry in April this year, Tata Power is developing Bhivpuri off stream open loop pump storage in Karjat area of Raigad district. The project has proposed a total investment of around Rs.13000 crore. This project will be a major step in India’s march towards the clean energy landscape. Likewise, with a 1800 MW Pumped hydro Storage Project to be located at Shirawata in Pune district MSEDCL will eventually be able to supply power in MMR as well.
MERC has invited public’s suggestions and objections for Adani Electricity’s license petition to supply power to Thane district and Torrent Power’s application to supply power to Nagpur and surrounding areas. A public hearing on the matter is scheduled to take place on 23 July. Torrent has also applied for power supply to Vasai- Virar, Kalyan Dombivali, Ulhasnagar and Thane municipal corporation areas along with Nagpur.
Looking at the overall scenario, this spate of petitions will be an opportunity to offer options to the consumers to choose the supplier of their preference. This legal provision is called Parallel Electricity Distribution License. For instance, Thane residents will be able to choose between MSEDCL and Adani Electricity, if the latter is selected by MERC.
Similarly, the residents of the island city of Mumbai will have one more option for receiving power supply. Likewise, the suburban residents will have another option, as well. Adani Group plans to invest over Rs.6000 crore for the setting up of the new network on the approval of the license.
Power consumption in MMR is projected to grow at 8 percent CAGR over the next five years and even beyond.
Particularly, the Navi Mumbai-Panvel belt is set to become a major national hub of development. Projects like Adani group’s Navi Mumbai International Airport and Mumbai Metropolitan Region Development Authority’s (MMRDA’s) planned projects in the region.
It is a welcome sign that the areas so far served by government-owned companies, called, Discoms, will be open for free competition, thus opening prospects for better services and reasonable tariffs for the consumers. Mounting losses of Discoms has been a major area of concern for successive governments. The undue influence of the trade unions and the proverbial red tape have stilted the healthy growth of the Discoms. Like other arms of the government, electricity supply public undertakings also are in dire need of improving their working. If this does not happen, the inference is inevitable. Nobody will like to be jolted by such a shock. This is the message of the private entrants eager to distribute electricity.
A Column By
Dilip Chaware – Senior Editor
A media professional for 43 years, with extensive experience of writing on
a variety of subjects; he is also a documentary producer and book author.
