The Hindu Business Line : Govt bets on franchisee model to push rural electrification projects

THE Government has taken a leaf out of the book of multinational food and retail majors to push through rural electrification projects in the country.

The Ministry of Power is betting heavily on the franchisee model, under which local bodies such as cooperatives, individual entrepreneurs and panchayats would be involved to execute or manage rural electrification projects for a fee.

Hitherto, rural electrification projects have not managed to make much headway since there have not been too many takers among private sector players for executing them.

The Ministry has already started work on handing over the management of rural distribution to franchisees in districts in Gujarat and Maharashtra.

The franchisees could be non-Governmental organisations (NGOs), user associations, cooperatives, individual entrepreneurs or the panchayati institutions and they would be entrusted with a rural electrification assignment in return for a fee, which would depend on the task involved.

"The plan is to start with entrusting the franchisees with the entire billing and collection system as a first step. The arrangement could be extended to include execution of distribution systems, including feeders from substations or from the distribution transformer levels. The mechanism envisages execution of these project and satisfactory maintenance of the system by the franchisee in return for a payment by the State Government," a Government official said.

Subsequently, the model aims at giving the franchisees the ownership of lines and accompanying infrastructure up to a particular point, say from the households in an area to the distribution feeder level, along with the accompanying responsibility of collecting bills from the users.

The Centre has given a major thrust to rural electrification projects, based on the UPA's National Common Minimum Programme (NCMP) commitments, and is focussing on the development of a rural electrification backbone, village electrification and household electrification to achieve the NCPM target of completing household electrification in the next five years.

Financial support in terms of capital subsidy to States for rural electrification has also been promised. State-owned Rural Electrification Corporation has been designated as the nodal agency for rural electrification at the Central Government level.

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