Addressing a long-pending demand, the Centre is reportedly planning to introduce a Bill in the Parliament that will amend the Electricity Act, 2003 and eventually end the power “distribution licence.”
According to a report by Business Standard, the Bill will allow any company to supply electricity to an area, after necessary regulatory approval. The move will also end the monopoly of existing power distribution companies (discoms), which are mostly state-owned entities.
It also implies that all areas will be thrown open to private discoms. The amended terms as part of the Electricity Bill, 2021, will be tabled in the ongoing session of Parliament.
In her Budget 2021-22 speech, Finance Minister Nirmala Sitharaman had said that a framework will be put in place to give consumers alternatives to choose from among more than one distribution company. She had said that there is a need to provide choice to consumers by promoting competition and breaking monopolies existing in power distribution sector.
This will give an option to monetise assets by existing players while allowing new players to strengthen infrastructure and start supplying electricity to consumers on demand.
The changes will allow operation of more than one distributor in a supply area giving option to consumers to choose electricity supplier based on competitive tari and assured supplies.
With regard to initiation of direct benet transfer (DBT) scheme in the power sector, the reform measure could be undertaken at the state level while the Electricity Act will wait for competition to settle into the distribution sector before proposing the changes.