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Fedco eyes more states for power distribution franchise business

The company is in talks with Rajasthan, Maharashtra govts

Jayajit Dash  |  Bhubaneswar 

Fedco eyes more states for power distribution franchise business

(Fedco), a fully owned subsidiary of Feedback Ltd, is looking at 5-6 more states for power distribution franchise business. has been actively operating in select areas of as an electricity distribution franchisee since 2012-13.

Devtosh Chaturvedi, managing director, said, “We are closely monitoring Uttarakhand, we have been getting calls. In Rajasthan, we are talking to them on the management-operator model. We have already started some work in Madhya Pradesh. For Maharashtra, there have been some internal discussions. We are looking at which model they will choose.”

For expanding its power distribution franchise model, is evaluating new hybrid models in addition to the conventional management-operator model. Under the management-operator model, the entire captive investment is made by the government. The complete accountability including pruning (& Commercial) loss, customer service and the introduction of new technology falls on the private player.

Chaturvedi feels the future of electricity distribution franchise business would be driven by a new model called 'Input based Calibrated Model'. In this system, a major part of the is funded by the government but transparently shared with the distributor franchise at the time of bidding. The franchisee takes the responsibility of transforming the business including reducing loss and increasing reliability and quality of power supply.

“In the input based calibrated model, the private player can share some For example, if the hypothetically works out to be Rs 100 crore, the funding ratio between the government and private player can be 90:10 and in cases, the private player's contribution can go up to 20 per cent but it cannot be a 50:50 sharing model”, Chaturvedi said.

With the presence of limited private players in electricity distribution space, new hybrid business models have to take shape through the management-operator model still holds traction.

“Torrent after Agra in 2009-10 did not go anywhere. The same is for CESC in Even we at could not go anywhere since 2012-13. This is because a huge on our balance sheet pulls us down”, said Chaturvedi.

He points out that private players should not choose their geographies, they have to get into a demography which is a mix of rural and urban consumers.

Referring to the example, he said, “We have reduced loss to the extent of 18-28 per cent in areas with 90:10 rural urban combine in the four divisions that we have been operating in four years. The starting losses were in the range of 55-60 per cent and we have brought it down to 30-35 per cent. We have also doubled the consumer collection meaning more revenues for the government.”

In the first three years of its operations in beginning 2012-13, claimed to have cut the loss by 22 per cent from 58 per cent to 36 per cent at the end of 2016-17. The reduction is the second best by any power distribution franchisee after Torrent at Bhiwandi (Maharashtra). Overall collection by in the same period doubled from Rs 198 crore to Rs 396 crore. In Odisha, operates in Khurda, Nayagarh, Puri and Balugaon divisions falling under the Bhubaneswar circle.

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