The Railways signed an agreement with the state-owned National Thermal Power Corporation in February 2002, which allowed them to bypass state electricity boards and source power directly from the generating company.
With the enactment of the Electricity Bill 2001, most bulk consumers will now have the same option, and industry is hoping for a better bargain from power producers.
"The Bill promises to do for the beleaguered power sector what the National Telecom Policy 1999, did for the telecommunications sector- give consumers the benefit of competition and reforms while doing away with a slew of licensing requirements," a power sector analyst said.
The Bill, which has been passed by the Lok Sabha and will be taken up in the Rajya Sabha on Monday, is expected to improve supply and efficiency in the power sector. It will remove the hegemony of state power boards and give bulk consumers the benefit of choice.
"We expect the continuous process industries, which need power round the clock, to approach us for power after the Bill is passed. No company has approached us so far, but there are a number of interested players," an NTPC official said.
At present, it is mandatory for generators to sell power to the state boards. But, once the Bill is passed, bulk consumers can approach the state electricity regulatory commission to set tariffs.
However, the state board has to provide its lines for transmission of electricity in lieu of a surcharge and the wheeling charges.
Though the consumer will have to pay for the cost of generation, besides the wheeling charges to the state electricity board and a surcharge set by the state regulator, the cost of buying power is expected to come down.
With captive projects also being delicensed, the state electricity boards could be severely hit. They have been using industry as a cash-cow for cross-subsidising domestic and agricultural consumers.
The post-Bill scenario seems quite simple. The valuation of generating companies will become more attractive because they will have a better cash flow position.
New investments in the power sector had often been stymied because generating companies could not guarantee timely recovery of dues from bankrupt distribution utilities.
Independent power producers will also benefit because they will no longer have to depend on the bankrupt boards for buying electricity.
Moreover, new power projects, except for hydroelectric projects, can come up without the clearance of the Central Electricity Authority.
The Bill envisages a scenario where a customer can choose his generation company, which can happen only over an extended period of time.
Therefore, the entire aspect of open access was being planned to be introduced in phases, said power ministry official. The state regulatory commissions have been mandated to set a schedule for the introduction of open access.
