New Delhi, February 1
The government proposes to open up the countries’ power distribution segment to competition by allowing operation of more than one entire in a supply area.
This will be a major reform in the power sector that will empower consumers to choose from where they would like to get their electricity supplies.
At present, distribution companies across the country are monopolies, either government or private.
Presenting the budget proposals in Parliament, Finance Minister Nirmala Sitharaman said that there is a need to provide choice to consumers by promoting competition and breaking monopolies existing in the power distribution sector.
“A framework will be put in place to give consumers alternatives to choose from among more than one Distribution Company, she said.
It is not clear whether the government will amend the Electricity Act to open up the distribution sector for competition or would look for options to bring competition within existing framework.
Amendment to Act was earlier not supported by the state that wanted more time for this reform initiative. In an earlier interaction with IANS, Power Minister RK Singh had also said that this reform would have to wait for going through the amendment route.
It is expected that under a franchise model, within the existing distribution set up more entities could be involved in maintaining electricity lines in an area.
The Finance Minister also proposed that to ensure the viability of Distribution Companies a revamped reforms-based result-linked power distribution sector scheme will be launched with an outlay of Rs 3,05,984 crore over 5 years.
The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements.
The budget also proposed to launch a Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.