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Electricity Distribution Franchise Model Might be Opening Doors of Opportunities for Investors

Shahram Warsi
Shahram Warsi Jul 13 2019 - 3 min read
Electricity Distribution Franchise Model Might be Opening Doors of Opportunities for Investors
Recently, the Power Ministry stated that they will be looking to implement electricity distribution franchise model for helping the distribution company of the country.

Franchising is now a globally accepted business model, especially in the emerging private sectors throughout the globe. Entrepreneurs can be seen shifting their gears towards the franchise-based business models for transforming their business’ vision into realities.

But won’t it be amazing to know that even the government is also backing up this business model for transforming a nation’s scenario in a positive manner?

Recently, the Power Ministry stated that they will be looking to implement electricity distribution franchise model for helping the distribution company of the country. According to the sources, the government assumes that the implementation of franchise model will contribute to the increasing efficiency of these firms in terms of collection and billing of electricity dues.

Franchising is believed to cut down the Financial Losses

According to ICRA, the state distribution companies are undergoing financial losses that could amount to be around Rs 23,000 crore. This is where the government believes that implementing electricity distribution franchise model might help cut down financial losses along with helping companies to become efficient in terms of billing and collection of electricity dues.

How will this Franchise Model Work?

The franchise model will be designed keeping the distribution companies in mind. It will be coming along with a short term plan where the entire focus will be on separating content and carriage in the electricity business.

On behalf of the distribution company, the state distribution companies will be providing tendered area to any private company in order to manage billing and collection. In return, the franchise has to ensure an intended collection on electricity dues for the period of contract it signs with the state electricity distribution for the particular area. 

The Rise of Public-Private Partnership (PPP)

Opportunities are exactly like a magnet for enthusiastic and passionate entrepreneurs. Digging out profit from opportunities is the core role of entrepreneurs ever since their inception happened.  In order to create more opportunities along with bettering the situation in the entire nation, we might see more number of public-private partnerships happening in near future.

As per a representative of a private sector company operating in franchise model, “The state governments should start planning for a bright future of the country through the Public-Private Partnership Model. The model is successfully under operation in Delhi where private company has 51 per cent holding while the Delhi government has 49 per cent of the entire share.”

Such collaboration not only helps an industry to get revolutionized, but also helps in technology upgradation and managing businesses which is of utmost importance.     

Franchising can be a Common Solution to Many Problems

The Indian government through Electricity Distribution Franchise Model can provide a common solution to many problems related to the supply of the electricity. Through the franchise model, the government will be looking to ensure 24/7 power supply along with penalties on discoms on performance issues.

Franchisors could also restrict the inefficiencies of the discoms to pass on to the consumers thorough a rise in tariff.

India has started to sprint faster than ever on the road of evolution, generating new business opportunities for the potential entrepreneurs along with presenting an enhanced India to the world. Investors who are waiting for the right moment can now step in the industry where new ideas and opportunities could greet them with fruitful results. 

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