Dedicated power supply arrangement for industry on anvil

The government proposes to put in place dedicated power distribution channel for industries in the manufacturing zones in order to provide competitively priced electricity to units giving make in India push.

Sources said the plan is to offer power distribution rights to units in such zones to a private sector entity. This entity will then procure and supply power to industrial units locating manufacturing hubs offering competitive tariff.

As part of Atmanirbhar Bharat initiative Power ministry has proposed power equipment manufacturing hubs in different states. These hubs are proposed to be set with deemed distribution status. This would allow these zones to get a dedicated power supply independent of state utilities and charges build into the system for such supplies.

“This is an excellent idea that would help industries get competitively priced power. The challenge would come from states as it needs to be seen how they react to the proposal that had the potential to take out sizeable portion of their revenue generating power customers,” said a power sector analyst asking not to be named.

The power supplied to industry by state discoms is loaded with cross subsidy surcharges that makes electricity tariff for industrial tariff expensive as compared to household or other subsidised consumers. Industry also get power supply through open access route directly for their consumption from generators but such arrangement attracts wheeling and open access charges that adds to the cost.

An independent power supply arrangement could reduce all these charges where tariff would be determined based on cost of procurement by distributors.

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