Tatas eye power franchise

Tata Power Company has proposed to the Maharashtra government that it takes over the entire operations and maintenance of the electricity distribution network in a particular area in the state for a fee. 
 
Tata Power will, however, continue to buy power from the Maharashtra State Electricity Board and sell it directly to customers. The tariff at which power is bought from MSEB as well as sold to the customers will be fixed by the state power regulator, the Maharashtra Electricity Regulatory Commission. 
 
In informal discussions with the state government, Tata Power has suggested that the "franchisee model" will make the transition to privatising the electricity industry painless. "Following such a model will act as a shock absorber and make the transition towards privatisation more acceptable. The franchising model is envisaged in the Electricity Act, 2003. What we have done is suggest a way to implement it," said P K Kukde, executive director of

Tata Power. 
 
The state government's position on Tata Power's informal offer could not be immediately ascertained. Tata Power Company's suggestion must also be seen in the context of a similar move by the Gujarat Electricity Board, which has invited offers from franchisees. 
 
The Tata Power formula involves the company investing in the distribution infrastructure in the area under its management and further paring transmission and distribution losses. Over a period of time -- say, five to seven years -- the assets in the entire area will revert to Tata Power. 
 
The consideration for this transfer of assets will be factored in to the tariff MSEB will charge for supplying power to the company. The interests of MSEB employees will also be protected. In the past, efforts at corporatising MSEB had been stymied by opposition from unions. 
 
The Electricity Act has made it mandatory for India's loss-making state electricity boards to reform themselves.