Private distribution companies are concerned about some of the proposed amendments to Electricity Act, 2003, such as empowering regulators in states to revoke the licence in case the distributor is unable to meet the prescribed standards, saying the changes may hurt the viability of their investments in infrastructure.
According to the proposed amendments, electricity regulators will have a greater say in determination of time period for the distribution licences and selling the assets of the distributors after the term of licence is over or revoked. However, the private companies say they will not be able to make the desired investments if the tenure of the distribution licence is not specified.
"The government is keen to attract private investments in power distribution to improve quality of service and reduce losses. However, the proposed amendments to Electricity Act are not in line with such intentions. Private firms will not come forward if the investors are not sure about their returns," said an executive with a private distribution firm, adding that the proposed amendments will reduce ease of doing business. India has seven private licensees — two each in Delhi and Mumbai and one each in Kolkata, Surat and Ahmedabad.