Motilal Oswal - MOSL: UTILITIES: Govt. seeks radical changes through Electricity Act

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Motilal Oswal

MOSL: UTILITIES: Govt. seeks radical changes through Electricity Act

Utilities: Govt. seeks radical changes through Electricity Act; 24x7 power, DBT and easing open-access are the key positives

The Ministry of Power has proposed amendments to the Electricity Act, 2003. Summary of key changes proposed are:

(a) Separating carriage and content, reducing the role of regulator

Electricity distribution will be split into carriage – the owner of the network, and content – the supplier of electricity.
Carriage will remain regulated, while content will be liberalized. Regulator’s role will be to fix a ceiling tariff, on certain benchmarks.
It will become effective after notification of a transfer scheme, for which no timeline is set in the Act.

In our view, this will be major step towards liberalizing the market. However, implementation could take long as issues like allocation of existing power purchase agreements (PPAs) and universal service obligations still need to be addressed. It could begin with circles where private distribution companies (DISCOMs) are operating (Mumbai, Delhi, Kolkata, Ahmedabad, and Surat). The earnings of private DISCOMs should not be at risk, as what they earn now is on carriage and insignificant on content.

19/09/2018 4 EN

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MOSL: UTILITIES: Govt. seeks radical changes through Electricity Act

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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