Gujarat’s dual power distribution model catches Centre’s fancy
The government is working on a proposal to replicate Gujarat’s “dual distribution model” in the power sector across Indian states. The idea is to cut down losses from selling subsidised electricity to farmers and bring their financially-ill distribution utilities to profitability.
In the Gujarat model, dual distribution lines were installed to supply power based on paying capacity of the consumers. The first line provided continuous electricity at a much higher rate, whereas the second line aimed at farmers supplied electricity for limited period at a subsidised rate. Gujarat was not only able to cut down the loss, but was able to report profit after they implemented dual distribution lines.
The strategy helped Gujarat Urja Vikas Nigam Ltd (GUVNL) — the holding company formed after the unbundling of the State Electricity Board (SEB) in 2003 — to shift its financial position from a loss of Rs 1,932 crore in 2003-2004 to a profit of above Rs 124 crore in 2007-08, the first year of the eleventh Plan period. Since then, profits have jumped five times to Rs 642 crore over five years ended March 12.