OUTLOOK AND OPPORTUNITIES
The Electricity Act, 2003, will bring about deregulation in a phased
manner in the generation, transmission and distribution of power in
the country. It is early to comment on the impact of the Electricity
Act, on power sector, as it is a new legislation in a yet unexplored
sector. However, some key aspects of the possible impact of Electricity
Act in the coming decade can be discussed as below:
1. Entry of more players into generation, transmission, trading and
distribution resulting into a competitive market.
2. Power trading shall provide a vital platform for access to a wider
market and tap the opportunities that have opened up with the Electricity
Act, 2003.
3. Increase of captive generation, especially group captives, set
up by group of industries to meet their power needs. This would open
new business opportunities, especially for existing utilities for
maintenance of such plants.
4. Consumers would have be able to choose their supplier for better
quality and price of supply.
5. Generators and distribution utilities would have flexibility in
pricing within the maximum regulated price, thereby helping the market
mechanism.
6. Tariffs would progressively adjust to reflect the cost to serve
and cross subsidies would steadily reduce.
7. The vertically integrated Electricity Boards would be unbundled
and corporatised facilitating privatization.
The facilitating provisions of the new Act will present new opportunities
for growth by enabling the Company to take up new distribution areas
and increase its customer base. The Gujarat Electricity Board (GEB)
has invited bids for appointing franchisees in its distribution
circles. The Company, being one of the most efficient electricity
utilities, has expressed its interest for the same.
The Electricity Act, 2003 will also enable the Company to optimize
its cost of procuring power and ensure better availability. At present,
the Company is buying its entire requirement from the Gujarat Electricity
Board. However, with ‘Open Access’ in transmission and
supply, feasible under the new environment, the Company will be
able to source alternative more reliable and cheaper power.
During the year, the Company has promoted a Special Purpose Vehicle,
called ‘Torrent Power Generation Limited’ (TPGL) jointly
with The Ahmedabad Electricity Company Limited and Torrent Private
Limited for setting up a 1000-1147.5 MW power generation project and
has tied-up for purchasing upto 50% of the generating capacity and
energy from TPGL. Once TPGL is commissioned, the Company’s
dependence on power from GEB and other sources would reduce, and
the Company would be assured of uninterrupted power to its customers.
RISKS AND CONCERNS
The enactment of the new Electricity Act, 2003 will lead to myriad
opportunities of growth in the power sector. It also makes possible,
introduction of competition, through second licensee in the Company’s
existing license area of operations.
Also the new Act permits a customer to set up his own captive power
plant. The setting up of captive power plants in the Company’s
license area has become feasible due to expectation of sufficient
availability of natural gas and bulk consumers, who have to bear
the brunt of the current cross-subsidies, may find it economically
viable to do so. While this provision may encourage addition of
generation capacity, it may lead to loss of lucrative bulk customers
for the Company.
The Gujarat Electricity Regulatory Commission is in the process
of prescribing standards of performance for the licensees. These
standards, as prescribed by the Commission will have to be adhered
to by the Company, failing which the Company may be subjected to
penalties.
Another provision of the Act that is an area of concern to the
Company is the new provision relating to detection and assessment
of theft, which is unfavourable to the Company.
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