Project Scope
The Union Ministry of Power and the Rural Electrification Corporation engaged
TERI to evaluate franchisee system in power distribution in the select districts
of five states –Assam (Nagaon), Madhya Pradesh (Damoh), Uttranchal (Pauri
Garhwal), Uttar Pradesh (Bulandshahr) and Karnataka (Uttar Kannada, Bijapur
and Gulbarga districts) to evaluate the strengths and weaknesses of the given
models, and suggest a road map for strengthening their operation. The franchisee
system in each of the study area is unique in its constitution and economic
modelling.
Objective
The project objective was to identify the status of franchisee system in each
area vis-à-vis its impact on the socio-economic development, benefits
and limitations, its training requirements, business model and selection process,
and need for remodelling on the basis of lessons learnt. The study also required
to assess if the scheme is aligned with Rajiv Gandhi Grameen VidyutikaranYojna
(RGGVY), wherever the latter is applicable
Process
Information on franchisee details and other aspects was gathered from the
respective power distribution utility, the villages covered, information base
of the distribution system under franchisee purview, connected load, energy
consumption pattern, monthly energy injected and revenue generated in each
district. Primary data was gathered through survey of sample villages and
information collected through questionnaire prepared for distribution utility,
franchisee and consumers. Focussed group discussions with all consumer categories
and key persons in selected sampled villages were also conducted. The quantitative
and qualitative data collected through secondary and primary sources was analysed
for all of seven districts in presenting the findings.
Findings
All areas under study have shown increase in consumer base and revenue collection.
In some regions revenue collection has more than doubled. The franchisee system
has been able to reduce theft and pilferage through user mobilisation for
new connections. The system has undoubtedly eased bill repayment for many,
especially in the remote rural areas. Overall, the system has established
a friendly interface between the utility and the people leading to reduction
in consumer grievances. While the system itself generates local employment,
it also helps and encourages business. However, there is still scope for improvement
in energy efficiency through improvement in distribution infrastructure and
regular training for franchisees.
Recommendations
With a view to make franchisee system more viable and their selection process
transparent TERI has made the following overall recommendations.
Evaluate technical
and financial strengths of franchisees and their long-term business goal in
the selection process
Utility must offer clearly
defined scope of work, roles and responsibilities to franchisees
Partnership between utility
and franchisee must be clearly delineated
Contract between utility
and franchisee should be applicable for 3-6 years with a clearly defined two-way
exit clause
Franchisee should be given
defined time to assess distribution network infrastructure that it proposes
to monitor
Utility must conduct regular
training for upgrading franchisees’ technical, commercial, financial,
social and managerial skills
Utility must endeavour for
consumer awareness and capacity building of its officials
Utility must offer a discussion
forum for all stakeholders for experience sharing and complaint redressal
Utility must dedicate a team
of 5-6 personnel headed by GM to lead franchisee function at zonal and district
level.