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Power to go the telecom way?
Mon, 30 Sep Pre-Open

Mobile subscribers were allowed to switch operators through mobile number portability depending on their usage pattern, the tariffs offered and the quality of service provided by the operator. There may be a possibility of something similar occurring in the power space. Power purchase portability, if you will.

As reported in the Mint, the government is planning reforms in the power distribution space. After breaking up of businesses into generation, transmission and distribution in earlier reforms, the focus now is on the latter; that of separating the distribution and supply of power. As such, there would be separate licenses required for both the activities. Carriage and content operations as they are termed respectively.

Power Minister Jyotiaditya Scindia is of the view that implementation of this plan would require changes to the Electricity Act 2003. A group has been set up to work out the implementation.

This is no doubt a step in the right direction as it aims at more competition - which would require the concerned parties to be more efficient as tariff rates would become more competitive and as such lower. At the end of the day, the benefit would come to retail customers.

Also, given the overall dull sentiments surrounding the power sector in general, any positive steps such as this would help in improving sentiments and as such, see more financial interest in the cash strapped sector.

Implementation of the same is what is going to be a challenge given the many concerns. These include technology, the resistance from the state governments (who currently are the monopoly distributors), and the existing liabilities of the State Electricity Boards (SEBs), amongst others.

Further, similar to how mobile operators were undercutting each other in order to get more subscribers, something similar in the power space cannot be ruled out. And we all know that this is something that should not occur. This is given the huge losses that are being reported by majority of the distribution companies. Therefore, the need of the hour is to address this in view of the fact that all of the segments of the power sector are interrelated and dependent on one another.

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