By IANS,
New Delhi : Allowing open-access in the power distribution sector is the key to attracting foreign investment and developing competition in the industry, says the Confederation of Indian Industry (CII).
“After the telecommunication and civil aviation sector, it is now time to unshackle the power sector,” CII director general Chandrajit Banerjee said in a report released Sunday.
Under the open access regime, every end-user will have the option of choosing the service provider – other than the distribution licensee for the area – a move that is expected to encourage power distribution companies to perform better as there would be tight competition.
“Free and fair open access, once achieved, would also attract a large number of investors in the power sector, which is extremely important as India is already lagging behind its power capacity addition target,” CII said.
According to the industry lobby, India has successfully operationalised inter-state open access transmission. “There is now an urgent need to operationalise open access distribution at intra-state level,” it added.
The high aggregate technical and commercial (AT&C) losses and the unpreparedness of utility companies are a constraint for intra-state open access implementation, CII said.
Besides, distorted tariff structure is discouraging utilities to make huge investments in distribution networks.
Increasing efficiency of the distribution companies would reduce losses, which would help the companies control their operating costs. To achieve this, CII said, the metering infrastructure had to be improved.
“Expeditious creation of metering and controlling infrastructure in the states is a necessity to operationalise open access. Regulatory bodies would need to issue facilitating regulations to govern the open access market,” the report quoted power utility chairman and managing director R.S. Sharma as saying.
CII also welcomed the proposal of the Planning Commission to make it mandatory for power generators to sell about 5 percent of their power capacities through an open access system.
The industry body said this would help improve the commercial attractiveness of the power sector.