AgenciesNEW DELHI: The government will delicense the electricity distribution sector to end monopolies, allowing any company to supply power in any area, power and renewable energy minister R K Singh told ET.
The move will induce competition in electricity distribution and empower consumers to switch networks but will not disrupt the existing licenses, he said.
Singh said the government has dropped a proposal on direct benefit transfer (DBT) of subsidy to electricity consumers and instead would first watch the impact of multiple distribution companies in a geographical area.
The power ministry will soon circulate a draft bill proposing amendments in the Electricity Act to omit the word ‘distribution licensee’ to enable more competition in power distribution. Singh said the Electricity Act of 2003 provides for distribution infrastructure sharing by eligible licensees.
“What we have in mind is simply delicensing. The existing distribution companies will remain as they are. They will continue functioning but now they will be open to competition,” Singh said. “Any company wants to take up distribution anywhere, they can. As we delicensed generation in 2003, we are delicencing distribution.”
The union budget presented on Monday proposed a framework to give consumers alternatives to choose from among more than one distribution company.
“Right now the distribution companies are monopolies though they may be making profits or their losses may be low. We want that consumers should have choices. Idea is to open it up by removing restrictions, let people compete in the same areas,” Singh said.
The move will induce competition in electricity distribution and empower consumers to switch networks but will not disrupt the existing licenses, he said.
Singh said the government has dropped a proposal on direct benefit transfer (DBT) of subsidy to electricity consumers and instead would first watch the impact of multiple distribution companies in a geographical area.
The power ministry will soon circulate a draft bill proposing amendments in the Electricity Act to omit the word ‘distribution licensee’ to enable more competition in power distribution. Singh said the Electricity Act of 2003 provides for distribution infrastructure sharing by eligible licensees.
“What we have in mind is simply delicensing. The existing distribution companies will remain as they are. They will continue functioning but now they will be open to competition,” Singh said. “Any company wants to take up distribution anywhere, they can. As we delicensed generation in 2003, we are delicencing distribution.”
The union budget presented on Monday proposed a framework to give consumers alternatives to choose from among more than one distribution company.
“Right now the distribution companies are monopolies though they may be making profits or their losses may be low. We want that consumers should have choices. Idea is to open it up by removing restrictions, let people compete in the same areas,” Singh said.
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