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MP govt plans to privatise power to cut down losses

Bhopal: The state government is gradually trying to implement its plan to privatize power in the state. In the past 20 days, two major firms have given a presentation before the government and suggested their models that could help the government cut down losses in the power sector.

Two plans have been put up before the government — the first is to set up a franchise model and the second is to allow a private firm to open its discom. In the franchise model, the government would give the distribution and revenue collection to a firm, while in the second model a new discom would be opened by the private firm in a region.

Officials at the CM’s Secretariat said that possibility is more of government going with the franchise model and handing over distribution and revenue collection work to a firm. It would be started as a pilot project in region where the government is facing maximum losses. The government is considering the option since power discoms have failed to cut losses and improve recovery. Tata Power and Fedco have presented their models before the government so far.

Both the presentations were made before the chief minister at the secretariat. Officials said once the model on which government wants to move is finalized, tenders would be floated for inviting private players. From coal purchase to ‘line loss’, all aspects related to power were discussed with the firms, say sources. Distribution (line) loss in MP is shocking 30%, causing a yearly loss of Rs4,000 crore.

Power tariff in MP is among the highest in the country, but the sector is still facing massive losses in transmission and distribution. A few days ago, Madhya Pradesh Electricity Regulatory Commission (MPERC) allowed discoms to hike tariff by 7%. Interestingly, in February, discoms had demanded an increase of only 1.59% but after the Lok Sabha elections, they revised their tariff petition and urged MPERC to hike power tariff by 12% to make up the revenue gap of around Rs 4,000 crore. On August 6, taking into account long-term power demand of the state, the cabinet decided to purchase 2,640MW power.