Power is a critical component of a country’s economic growth. As a country’s population increases, so does its need for electricity. In May 2018, Indian was placed at the 4th place in terms of overall power amongst 25 countries within the Asia Pacific region. Our power needs are not going to fall any time soon and thus this is the perfect space for expansion and building a franchise model. Let’s take a closer look at how this would work and how franchisees could benefit from it.
Franchising the distribution of power is not a new concept in India. The first power distribution franchise was run in Bhiwandi over a decade ago. The model was extremely successful and accelerated the franchise movement. There are currently 14 distribution franchises operating in parts of Maharashtra, Rajasthan, Uttar Pradesh, Bihar,and Odisha.
The power ministry recently announced that it is looking at implementing an electricity distribution franchise model across the country as part of the new tariff policy. Thus, for several entrepreneurs, this may be the ideal way to make their dreams a reality.
This franchise model will tender out areas to the highest bidder to manage billing and collection on behalf of the state Discom. Each franchise will be designed keeping the distribution company in mind. For the duration of the contract, the franchisee will have to ensure the collection of electricity dues from that area. This is a short term plan to help power distribution companies until carriage and content in the power industry can be separated. Here ‘carriage’ refers to the wires and physical infrastructure used to transport electricity and ‘content’ refers to the electricity itself.
In Delhi, the state government has signed a Public-Private Partnership (PPP) with a private company. Other states may also follow suit with similar partnership models.For franchisees this would not only be a great business opportunity, it would also give them a chance to be innovative and make smarter use of technology in the power space.
Though the power sector is one of the most crucial industries for the country, it is not a profit making one as yet. This can be attributed to many factors including billing inefficiencies, power theft and regulatory delays in increasing tariffs. For example, faulty meter readings lead to disputes and unpaid bills. In other cases, the bill may not reach the intended consumer and hence again it remains unpaid. Privatizing these aspects can help the Discoms deal find effective solutions to these problems. The model puts the onus of bill generation and collection on the private entities that have greater resources available to them. Thus, it can help them cut down on financial losses.
For the franchisee, this is an ideal partnership where the quality of the productbeing delivered to the customer is guaranteed and not something they need to worry about. Customers will continue to get power through the Discoms. All the franchisees must do is ensure that customers get an accurate reading for their bills, get the bill to them and provide an easy way to make payments. The model also helps franchisees generate employment.
This model benefits consumers as well. With the introduction of different franchisees, pconsumers will be able to choose a distribution agent in the same way as they choose a mobile service provider.The model ensures consistent power supply to the consumers. Discoms are liable to pay penalties on performance issues and hence there’s a lower risk of consumers being without electricity. They will also stand to benefit from subsidies via Direct Benefit Transfer. Lastly, the inefficiencies of the Discoms in terms of bill collection and the losses incurred will not be passed on to the consumers in the form of tariff hikes
Franchises are great for everyone with an entrepreneurial spirit. It offers less risk and a faster timeline for making profits. In terms of power distribution, the basic infrastructure is already in place. All you need is a few smart tools to check power consumption and theft. If you’re interested in exploringthis opportunity, having Byrny as your technology partner can be very beneficial. We help with every step of consumer interactions from onboarding and consumer care to asset management, billing and payment collections. Their photometer billing is accurate and GPS enabled to minimize the risk of theft. Byrny makes the bill generation and distribution process traceable and transparent. So, if you’re thinking of becoming a power franchisee, give us a shout out.