Another power firm’s distribution licence bid rejected in Haryana

  • Navneet Sharma, Hindustan Times, Chandigarh
  • Updated: Feb 25, 2015 12:48 IST

After DLF and Essar Group, West Bengal-based India Power Corporation Limited (IPCL) has failed to get the nod for setting up a parallel distribution network for retail supply of electricity to consumers in Gurgaon.

The Haryana Electricity Regulatory Commission (HERC) has rejected the application of the company, which holds the distribution licence at two places in West Bengal and Bihar, for grant of licence to lay its own distribution lines and supply power to consumers of all categories in the municipal corporation area of the Millennium City for 25 years.

Disallowing the licence request, the two-member regulatory body, in its 61-page order recently, held that the IPCL application for grant of distribution licence was deficient in form and content as well as premature, including the assessment of requisite infrastructure and the corresponding investments required to build and operate reliable distribution. “The applicant has not undertaken proper technical assessment for laying down a completely new distribution system and not sufficiently demonstrated its capability to meet the load requirement. Also, the transmission licencee (HVPN) may not have adequate transmission infrastructure to wheel power that may be arranged by the company for onward supply to its prospective consumers,” according to the order.


In its observations on the latest request, DHBVN objected to the parallel network proposed by the private company, citing the “already exhausted area of the Gurgaon municipal corporation, which is crowded with transmission and distribution cables, communication cables, fiber optics etc.” Raising the issue of “cherry picking” (choosing only the profitable areas), it said that the applicant firm was cherry picking the consumers within the same municipal area which is completely contrary to the national electricity policy and against the objective and spirit of the Electricity Act, 2003. “In the event, the private firm is granted the distribution licence and if at all migration of consumers takes place, the subsidised categories shall have to face the brunt of possible increase in tariff,” the corporation warned.

While stating that the intention of the company was to secure market for its generation plants, the discom also raised issues related to capital adequacy, phase-wise rollout and projected supply.

However, a power sector expert told HT that instead of stifling competition, the state-run corporation, whose 45% revenue comes from Gurgaon, should welcome a second distribution licencee and use the opportunity to improve its efficiency levels to take on the competition.

IPCL, which submitted its licence application last year, had proposed to set up its own distribution network and related infrastructure - the first private electricity distribution in the state - in the Gurgaon municipal corporation area with an investment of Rs 1,633 crore in first five years.

The service area spread over 200 sq km has a population of over 11 lakh with 2.30 lakh connections of various categories. While IPCL, which holds the distribution license in Asansol-Raniganj belt spread over 618 sq km in West Bengal and Gaya in Bihar, had proposed to cover the area in five phases, the commission asked it to carry out a study. After the study, the company had made some changes in load assessment and capital expenditure estimates.

Discom monopoly continues

Before IPCL, DLF and Essar Group, both leading private companies, had over the past nine years unsuccessfully tried to secure the distribution licence for retail supply. While DLF’s application was disallowed, Essar withdrew its application just before the public hearing on its application.

The power sector regulator’s order limits the consumers’ choice of power and allows the monopoly of Dakshin Haryana Bijli Vitran Nigam (DHBVN), which holds the exclusive rights to supply electricity in Gurgaon and several other districts of south Haryana, to continue. The state-owned corporation has been opposing the entry of private players in retail supply of electricity all along, arguing that there was no room for setting up a parallel distribution network and a second licencee (retail supplier) would only burden the existing network.

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