The Hindu Business Line : Torrent to supply power to Bhiwandi

Bright prospects
TPAL to distribute power for 10 years to 1.6 lakh consumers.
MSEDCL is likely to receive Rs 150 crore-180 crore per annum as revenue.

Mumbai , Sept. 20

The powerloom town of Bhiwandi near Mumbai has been a chronic defaulter of power bills for more than 10 years.

Transmission and distribution (T&D) losses have been 44 per cent in the last couple of years. And to stem the losses, Maharashtra State Electricity Distribution Company Ltd (MSEDCL) has appointed Torrent Power AEC Ltd (TPAL) as `power distribution franchisee' for Bhiwandi circle.

First model

This is among the first models of its kind in privatisation of power distribution in the country, using a private company as franchisee, says Mr Girish Sant, an energy analyst with Pune-based Prayas, a non-profit outfit working in the sector. TPAL will distribute power for 10 years to 1.6 lakh consumers.

MSEDCL is likely to receive Rs 150 crore-180 crore per annum as revenue from this arrangement.

MSEDCL has issued a letter of intent to TPAL and due diligence is currently being undertaken by senior managerial teams from both the companies.

The final agreement is likely to be signed before the month end and by October, TPAL will start distributing power, a Ministry source said.

Further, the source pointed out that the Union Power Ministry had suggested the replication of the Bhiwandi-model to the other State electricity boards to enhance profitability and reduce their T&D losses.

MSEDCL had to resort to this model, as there was a large-scale power theft, especially by industrial users, the source observed.

Power bills

Industrial users form a cartel, where 70 per cent of users default on the power bills and 30 per cent pay the bills, sources said.

Technically it was impossible to cut the connection of the defaulter without affecting the power supply of the consumer who has paid the bills, the source explained.

Also, the ever-looming threat of physical violence for cutting connections has proved to be a disincentive to the MSEDCL field staff, the source said.

In 2005-06, MSEDCL supplied 2,426.99 million units to Bhiwandi circle, the actual sale was of 1,346.29 million units and the T&D loss was of 1,080.70 million units.

The current collection rate of MSEDCL is Rs 1.40 per unit, and with the new franchisee model, the collection would increase to Rs 1.83 per unit.

No hike

There would be no increase in the tariff by TPAL, who has also agreed to undertake capital investment in power infrastructure in the circle, the source said.

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