Under the distribution franchisee model, which is being tried for the first time in the country under the Electricity Act 2003, the bidders should enter into an arrangement with the state government for three-four years and pump in the entire investment. The bidders should share the revenue surplus with the state government. The distribution losses should also be reduced to the internationally acceptable level of 10-12 per cent from the present 35-40 per cent level.
The Gujarat government has roped in the Mumbai-based Feedback Ventures as consultant to select the bidder.
Top sources told FE that the franchisee model is different from the Delhi model where 51 per cent stake has been offered to private companies and the assets would be transferred to them.
Under the franchisee model, the Gujarat government has preferred to make the power distribution a retail operation by involving the private sector.
Such a model is permissible under proviso 7 of Section 14 of the Electricity Act.
It says, In case where a distribution licensee proposes to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned state electricity regulatory commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply.
Against a total generation of 4,538 mw power by the Gujarat Electricity Board, the state has to make an all-out effort to meet the peak demand of 6,661 mw from the drawal of power from private units and the centre.