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Delhi Power Distribution privatisation - a model for all cities to follow?

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Linked here is a ppt presentation on the transformation of the Delhi power supply scenario, at least in those parts coming under Tata Power Delhi Distribution Ltd (TPDDL), over the 8 years since the taking over from the Delhi Vidyut Board (DVB). The information was obtained from TPDDL themselves. Some interesting highlights are:

  1. AT&C (aggregate technical & commercial) losses dropped by 75%, from 53.1% to 13.2%.
  2. Average retail tariff rose by 40%, from Rs 3.84 pu to Rs 5.38 pu, of which a 22% increase was allowed by the regulator just this September. This should be seen together with the increase in average power purchase price over the period, which was at 179.6% (from Rs 1.52 pu to Rs 4.52 pu). So, while the sale to purchase price ratio during the DVB reign was a whopping 2.53, it reduced dramatically to 1.19 at the end of the 8 years since the TATA take over.
  3. No of consumers went up by 69.1% (from 700,000 to 1184,000).
  4. Distribution Transformation Capacity in MVA went up by 116% (from 1926 to 4160)
  5. System reliability went up by 42.7% (from 70% to 99.9%) - meaning, I expect, the sales of gensets, inverters, UPS devices, batteries, converters, emergency lamps, voltage stabilisers, candles, match-sticks, etc must be dropping drastically.

Can there be a more compelling reason than all of the above for privatisation of distribution, particularly in cities, even with or without a most pro-active and go-getter MD like Mr Manivannan at the helm? After all, how much can he alone achieve given all of these constraints?

Well, the process has evolved over the years, from when the detractors - largely status quoists (some - on account ideological reasonings, plainly misplaced; others - out of vested interests), saw it all as doomed for failure - check this, and this. They will of course now point out to the reduction in the number of employees by 28.9% (from 5600 to 3981). However, that's only in the case of direct employment. As compared to that, the buoyancy that the economy attains, resulting from the ready availability of cost efficient power, is obviously leading to multi-fold employment generation in every other industry, power being a key infrastructural component affecting all of them.

The route for cities thus becoming clear, the route for rural areas can be any of the many models already available - a good one would have been the Hukeri (Belgaum dt, Karnataka) model, if not for the deliberate sabotage of it being carried out by the neta-babu combo in order to perpetuate their rule. Whatever, the route can't be the one adopted by BESCOM (and the other DISCOMs in Karnataka), supposedly to cross-subsidise the losses suffered in the rural networks, but essentially to cover up their inefficiencies (as also plain thefts), all in the name of farmers.

City loads and rural loads have totally different characteristics, and unless these are separated and managed, neither can be met satisfactorily. But, the important question that arises is do you want to meet the needs satisfactorily, or do you want to perpetuate your vested interests?

Muralidhar Rao

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Comments

what is the point?

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what is the point of privatisation if one government monopoly is replaced by 2 private ones? This is no competition. How is this different form just making the govt agency completely independent (i mean financially) ?

Who has written this presentation? Do you trust the source?

Every house I know of in Delhi still has a inverster/generator. Power supply is still not trust-worthy.


murali772's picture

welcome feedback

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what is the point of privatisation if one government monopoly is replaced by 2 private ones? This is no competition.

Power distribution is a natural monopoly area, and consequently the only way you can achieve accountability is through a comparison of the performances of the different players across the city, and pulling them up for shortcomings, through the regulatory body/ consumer forum etc.

How is this different form just making the govt agency completely independent (i mean financially) ?

As long as it is a government agency, complete independence is just not possible, and that precisely is the problem.

Who has written this presentation? Do you trust the source?

The source is TATA power itself. So, the feedback from Delhi residents is most welcome, and essential as part of the process of making them accountable.

Every house I know of in Delhi still has a inverster/ generator. Power supply is still not trust-worthy.

You are talking of the areas covered by TATA Power too? In which case, I expect the TATA officials, with whom I am in touch, will respond. And, that's exactly how we can perhaps use PRAJA as the interface between the consumers and the service providers, and help make things better for everyone. And, do forward this to all the citizens of Delhi you are in touch with.

Muralidhar Rao
Naveen's picture

Different Goals

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I think in the long term, govt cannot continue to manage several services all by itself & the private sector will have to be roped in - hotels, power, airlines, telecom are examples.

At the same time, govt cannot be expected to wash it's hands clear off every service, particularly social services such as subsidised schooling, healthcare, power, urban transport, etc - this is true even in the most developed countries since there will always be sections that need subsidised services - the source of subsidies can vary & in the case of Karnataka, they have chosen to cross-subsidize -- nothing wrong with this either.

The terms detractors, status quoists, vested intersets, etc thus seem misplaced in these arguments since there are much larger sections of society in India that are dependent on govt subsidised services. Whilst the urban rich may crave for continuous power even if it means higher costs, the poorer sections need power at low rates, even if it means interruptions.

Thus, comparisons & arguments speaking of private sector success over poorer performance of govt-managed services need not necccessarily imply that the private sector has outperformed govt services since the two meet completely different societal needs

kbsyed61's picture

Naveen, Bang On!

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Naveen,

You are bang on saying there are areas where Govt of the day can't abdicate its responsibility and it is in govt's own interest to withdraw from areas which can be made available for private players.

It is interesting to note, in the mecca of capitalism, USA, experiment with private BESCOMs has miserably failed in the state of California.

Private enterprises also has many examples of mired in corrupt practices, eg. ENRON. Therefore can't paint everybody with same brush.

 

murali772's picture

poor need help, not show of help

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@ Syedbhai

The government's direct delivery mechanisms have largely failed, or, if you want to be more charitable, you may say 'under-performed'. And, the biggest sufferers of such under-performance by government service providers, particularly when they are monopolies, are the poor, since they cannot afford the alternatives (which however the rich can find ready access to, as also find ways to pass on the consequent additional cost burden) - so, you have the gensets/ inverters/ converters/ batteries/ UPS's in case of poor quality power supplies; borewells/ tanker-water, etc in case of poor water supplies; cars/ mobikes/ autos etc in case of poor bus services; private clinics/ hospitals as compared to ESI and government hospitals; private schools as compared to government schools, and so on.

There's absolutely no gainsaying the fact that supplies of essential goods and services to large sections of the public need to be subsidised. But, the question is of how best to achieve it. Many eminent economists, including Lord Meghnad Desai, Kaushik Basu, Swaminathan Aiyar, and a host of others, have suggested the "coupons" route, amongst others (debates on PRAJA, on each of the segments of which, can be accessed here), which seem to make far more sense than the present direct delivery systems of the government. And, the neta-babu combo's in many states are finally beginning to adopt them, realising that they can't keep fooling the people forever, even as such combo's in many other states are desperate to retain the status quo, not wanting to give up on the vast vested interests that it serves, so easily - check this out for the latest.

With deliveries, by private players, becoming far more efficient, the poor (identified in a transparent manner) will enjoy better services at affordable prices, and the exchequer will be burdened to a far lesser extent too. The consequent savings to the exchequer can perhaps be used for affording more concessions to the poor.

Comments such as you have made will certainly convey a picture of you as being pro-poor, like the typical neta-babu combo's are wont to convey. But, if you genuinely want to help the poor, which I am sure you do, it would help a lot if you could instead demand efficiency, which, whether you want to admit it or not, is antonymous with government service provisioning, with of course the rare exceptions.

Government has a very important role to play - as the facilitator, regulator, and at times as the controller. And, for this, you need quality people, who you can afford by getting out of areas where you don't need to be, and down-sizing thereof - check this.

Talk of ENRON, failed systems in California, etc, have to be seen in their context. May be you could start a blog on why the California arrangement failed even as those in Ahmedabad, Surat, Greater NOIDA, Kolkata, Mumbai, etc have worked very well all these years, and now Delhi is all set to join them fully, if it already has not. May be the Californians can derive some lessons, or the TATAs, Ambani's or Torrent's can take them over.

Putting things the way you have done, I am afraid, is only going to be providing alibis for those perpetuating their vested interests.

Muralidhar Rao
Naveen's picture

Syed, thanks

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Syed - quite right. For every example of govt failure or greed of ministers & bureaucrats, there are several examples of private sector greed as well - 2G, 3G, even Radia of Tatas are recent, huge examples.

So, very true that one can't label all ministers or all private parties as bad or good. There are mixtures of all types in every sphere!

murali772's picture

SPV's

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Exactly. And, who is supposed to keep a check on the private sector from indulging in such practices? It's the government, through regulators, amongst other mechanisms. But, when the government agencies themselves are breaking all rules and involving in scams of every kind, the regulatory mechanisms lose their effectiveness, and then it becomes a free for all.

More and more, the the public sector has become the vehicle for pursuing the personal agenda's of babu-neta combo's (railway projects in West Bengal, whether feasible or not, when the minister is from there; our own poorly conceived TTMC's; AIR-INDIA - there's no end to the number of scams there, etc) than serving any useful purpose. In fact, on the other hand, they are causing serious damages to the proper growth of the economy.

Muralidhar Rao
murali772's picture

On the other hand, - - -

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Faced with the threat of a power blackout in most parts of the city, the Delhi government on Monday gave in to pressure from private distribution companies BSES Rajdhani and BSES Yamuna and agreed to infuse equity worth Rs 500 crore in the two companies to bail them out of a liquidity crisis. - - - - - The CM said to "ensure a level playing field" , government would offer similar monetary help to the Tata owned discom, NDPL, even though it has not sought any assistance. The BJP was quick to slam the decision, saying tax-payers' money was being squandered away.

For the full report in the Economic Times, click here.

Apparently, the two Anil (Dhirubhai) Ambani led companies are either not able to manage their funds properly, even as the TATA companies are able to (under similar circumstances), or they are diverting funds to their other cash-strapped entities. Now, while transfer of funds to cash-strapped sister companies is not an unusual practice, if the same results in jeopardising the operations of the lending company, it's not a proper thing to do. Besides, if the lending company is a utility, I would say it's totally objectionable.

Well, the regulators, the government, as well as the public are all taking notes of these happenings, and if the ADA-led company managements can't buck up, they are digging their own graves. If the situation continues, I expect it should be possible to ease out ADA, through transfer of shares to another group (perhaps Torrent or CESC), facilitated by the funding agencies/ banks.

If one wants to be charitable to ADA-led companies, it could be argued that this was necessitated on account of the delay by the regulator in effecting the tariff increases, even as the input costs had been rising hugely from long. And, perhaps, the TATA company wanted to use the opportunity to project itself as the good boy to earn brownie points - well, that's part of the game too.

In the meanwhile, it should be interesting to see if these ADA-led companies have performed as well as the TATA company, from the technical stand-point.

Whatever, I don't think anybody can deny that Delhi has come a long way from the dark DVB days.
 

Muralidhar Rao
sun_n_moon's picture

Murali - what's with your

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Murali - what's with your private sector chappies. be it airlines or power, bail out is the order of the day. a kind of private gain and public losses as seen at wall street.

for PPP to be more credible, private sector firms will need to buck up.

what say you, privatisation champion ?

 

murali772's picture

wait a minute!

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@ S&M  -  Wait a minute! How do you say that? Nobody can deny that the TATA company's performance has been anything short of remarkable. I don't yet know enough about the ADA-led companies' performances from the technical stand-point. I expect it will be quite as good as of the TATA company. And, if they are seen to be floundering from financial management stand-point, would it be wrong to say that it has perhaps also to do with the stalled reforms process (check this)?

Well, being in the thick of action, you should know that better than anyone else, I guess.

Muralidhar Rao
murali772's picture

Corroboration

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Excerpts from an interview of Mr S L Rao, arduably the country's foremost energy expert, and first chairman of CERC, published in ToI. For the full text, click here.

New Delhi is the best example where Sheila Dixit handed over power distribution to two private players: Reliance and the Tatas. The net result: the Delhi government has been able to save Rs 20,000 crore - - - . Today, New Delhi is the only city after Mumbai where one does not use stabilizers or inverters as there is 24x7 power supply.

The power sector should be run by managers, not bureaucrats. The state has spent Rs 3,847 crore to buy power since 2010. Power purchase is like buying shares on the stock exchange where brokers are following the rise and fall of scrips. We have power experts who keep tabs on the rates in the energy market. Here, power trading is done by IAS officers.

Retired IAS officers are being appointed to head commissions and most follow diktats of local politicians. Retired bureaucrats prevent state governments from revising tariff, by disallowing legitimate costs from going up, and cause revenue loss.


Retaining the status quo will amount to nothing less than criminal negligence now that the way forward has been established. There will be marginal increases in tariffs and resultant costs. But, the savings due to lesser dependence on standby arrangements, due to much improved quality, will more than offset those cost increases. Perhaps it's time the civil society joined together in demanding true reforms along the lines of the Delhi model.

Muralidhar Rao
Dhanuraj D's picture

I support having more players

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I support having more players in the power sector. Many a times, i wondered why State Electricty Board has the monopoly over the sector. If one analyses the volume of loss due interrupted power supply and power loss, it will definitely end up supporting more players. it does not mean that we are helping a private company to substitute the state monopoly to remain as a monopoly. i wish a day when i can opt for power companies of my choice which sell electriocty of differnet price and quality. I am sure that will lead to more employement generation. 

murali772's picture

Ineffective regulatory commissions

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On electricity, Dr. JP said that the Andhra Pradesh Electricity Regulatory Commission has become a branch office of the Government and failed to discharge its statutory responsibility of ensuring Discoms (distribution companies) are in good health. A Government which has neither money to reimburse Discoms for the subsidies it offers to various sections of people nor courage to raise tariffs did not submit the annual certificate on the health of Discoms in earlier years. The APERC which had winked at Government failure now permitted Discoms to burden consumers with fuel surcharge for power consumed in earlier years. How could industrialists pass on the increase in costs for goods manufactured in previous years now, Dr. JP asked.

Dr. JP accused the Government of indulging in hypocrisy by claiming to attract investments worth lakhs of crores of rupees and provide jobs to tens of thousands of people even as it turns existing industries sick by starving them of power. The traditional parties continue to pursue bankrupt policies which will ensure darkness in our houses, and unemployment for our youth. Lok Satta has demonstrated what could be done by sensible management of power sector about a decade ago. In Kallacheruvu, in West Godavari district, Lok Satta franchisee managed a feeder line and saved 19% power, eliminated corruption, improved quality and showed the way of ensuring 24 hour power in all villages.

In reply to a question, Dr. JP said gas allocation for power generation has become a cash cow for those in power at the Center and in States.


For the full text of Dr Jai Prakash Narayan's speech, click here.

Same story in most states. And, the solutions are pretty straight-forward too. Besides, it is good politics - only it needs to be seen that way. Perhaps there's a role there for the civil society.

Muralidhar Rao
murali772's picture

answer is blowing in the wind

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“Jayanagar suffered last week when there was intermittent supply. If there was power for one hour, the next hour would go dark. A 66KV transformer is going to be installed in Jayanagar III Block soon. We can then hope for some quality power supply in our area,” said N Mukunda, member of Citizen Action Forum, Jayanagar V Block.
    
“The problem we face nowadays is that there are frequent power cuts for brief spells. Often, it is without notice. But our jurisdictional electrical engineer is accessible and helpful and responds to the issues immediately,” said ET Ponnukuttan, secretary, Richards' Town Citizens Association.
    
“Bescom holds meetings with consumers every third week and when we ask for uninterrupted supply, they have no reply. They blame KPTC for not being able to regulate the sudden spike in the load. But we are paying a good price for continuous power supply. Why can't KPTC and Bescom manage to give us quality power,” asked Ravindra Nath Guru, resident of Banashankari II stage.
    
Residents believe the energy department has a commitment to ensure quality power supply whenever it effects a tariff revision. Their other grouse: Bescom's complaint desk is always busy or the person taking the call will be clueless about the state of power supply. This state of the complaint desk, they believe, defeats its very purpose and makes a mockery of the utility’s claim to be a service provider.


For the full report in the ToI, click here

Like Mr Ponnukuttan has stated, the problem is not the engineers, nor is it the MD. They are all very fine people. But, given the constraints of the system, there's this much they can do and no more. So, where does the answer lie? And, that also quite obvious now. So, what's anybody waiting for?

Muralidhar Rao
pdk's picture

Mr S L Rao - Conflict of Interest?

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1.  Mr S L Rao who is quoted to buttress the privatisation in Delhi, is not all above board (to put it mildly).  He fails to note that he is on the Board of Directors of Reliance Power as he praises the Delhi model.  Blatant conflict of interest.

2.  I don't know of any period when power was in private hands in Karnataka.  So it is surprising when Mr S L Rao  notes that Karnataka 'used to be the best'.  How can that be?

3.  The mistake he says Karnataka made is not 'not privatising', but allowing a single bureaucrat to head all the unbundled activities.  So maybe privatisation is not the only option?  Just saying.

4.  Does Mr Muralidhar Rao have any conflicts of interest?  First a unattributed PPT praising the Tata company NDPL.  Secondly he notes that he is in touch with the Tata officials.  Some information throwing light on this aspect would be welcome.

pdk's picture

Then there is this...

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A India Today piece.  Bye the way, some of the touted improvements, like reduced AT&C losses are easily matched by public utilities like BESCOM.  Others are because the Tatas have their own power generation company etc

 
 
Nigeria is reportedly so impressed with India's - and more specifically, Delhi's - model of privatisation of power distribution that it wants to adopt the Delhi model while selling off its own state-owned power generation and distribution businesses. 
 
... One wonders whether the Nigerian authorities have had a chance to actually interact with the beneficiaries of power reforms - Delhi's electricity consumers - before coming to the conclusion that the Delhi model was the best one to follow. 
 
...One also wonders whether Nigerian Regulatory Commission and the Bureau of Public Enterprises of Nigeria, the two government bodies which will be involved with the African nation's power privatisation process, have had a chance to go through the latest report of the Comptroller and Auditor General of India (CAG), which has lambasted the Delhi government for rising power shortages and a mounting power deficit, subsequent to privatisation. 

There have been many demands raised by consumer groups, the latest by the Residents Welfare Associations (RWAs) of the capital, for an independent and neutral audit of the accounts of the power distribution companies. The apex association of RWAs has even moved a division bench of the Delhi High Court seeking a court order for an outside audit.
 
The reason for this level of outrage and disbelief of claims by the government and the distribution companies are not far to seek.
 
Far from seeing a palpable improvement in service quality and delivery and a reduction in costs - the main promises made while justifying the power business - they have seen a sharp increase in power tariffs, falling service quality and growing outages and shortages. In other words, privatisation - as far as consumers are concerned - have made things worse, not better.
 
...In Mumbai, for instance, the stateowned - BEST is actually owned by the Brihan Mumbai Municipal Corporation - sells power at a lower cost to its consumers than its privately owned rival, has a comparable or better record across most service delivery parameters, and manages to meet the government's 'social obligation' of providing power to economically weaker sections of society
murali772's picture

who is harbouring vested interests?

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Mr S L Rao who is quoted to buttress the privatisation in Delhi, is not all above board (to put it mildly).  He fails to note that he is on the Board of Directors of Reliance Power as he praises the Delhi model.  Blatant conflict of interest.

Because Mr S L Rao is a director on the board of Reliance Power, does not mean he can't air his opinion on power reforms. Now, there can't be much of an argument over the fact that efficient grid power supply greatly reduces the burden on fuel (and, thereby the impact on the environment), finance and other resources, compared to the dependence on the conventional alternate sources (like the genset). So, campaigning for something that's in overall public interest, even when you have a personal interest in the vehicle that's bringing it about, can no longer be treated a vested interest.

I don't know of any period when power was in private hands in Karnataka.  So it is surprising when Mr S L Rao  notes that Karnataka 'used to be the best'.  How can that be?

Apparently, Mr S L Rao was nostalgically referring to Karnataka having always been in the forefront of power development in the past - Bangalore being the first city in the country to have organised power supply (from the Shivasamudram hydel station) etc. The situation was a lot different then, of course. Today, it's clearly seen to be beyond the government's capacity.

The mistake he says Karnataka made is not 'not privatising', but allowing a single bureaucrat to head all the unbundled activities.  So maybe privatisation is not the only option?  Just saying.

Convenient way of looking at it.

Does Mr Muralidhar Rao have any conflicts of interest?  First a unattributed PPT praising the Tata company NDPL.  Secondly he notes that he is in touch with the Tata officials.  Some information throwing light on this aspect would be welcome.

When I made the opening post, it didn't occur to me to mention my source for the data provided. But, in reply to the very first response itself, I posted under the caption 'welcome feedback' - "The source is TATA power itself. So, the feedback from Delhi residents is most welcome, and essential as part of the process of making them accountable. And, that's exactly how we can perhaps use PRAJA as the interface between the consumers and the service providers, and help make things better for everyone. And, do forward this to all the citizens of Delhi you are in touch with".

Besides, I forwarded the link with the deliberatively provocative caption "Delhi Power Distribution privatisation - a model for all cities to follow?" to a whole host of JNU (arguably the country's foremost adda of Socialism) 'intelligentia', whose mail IDs I have with me, apart from many others through Yahoo and Google groups, and directly even, inviting them all to take up the debate if they wished to. I also sent the link to PRAYAS (in Pune - arguably the most knowledgeable group in the country on power issues). Though such invitations have received fair responses in the past, this time around, the responses were rather poor, with hardly any that can be termed critical. So, I concluded that was corroboration of my overall view.

And, for all that, when the likes of Mr pdk choose to suspect my motives, it plainly becomes a reflection of some problem they suffers from, I guess. And, talking of vested interests, the question that arises is 'is Mr pdk in some way involved with the genset/ inverter/ converter/ battery/ etc etc lobby; or the electricity board union/ power theft mafia?'.

Yes, I am in touch with TATA officials, as also of Reliance. I worked my way to reaching out to them to see "if praja.in could become the interface between the consumers and the service providers, and help make things better for everyone". If they were in Bangalore, perhaps, it could have happened already. We in PRAJA have likewise been pursuing with Mr Manivannan, MD BESCOM, too - check this.

Muralidhar Rao
murali772's picture

Nigerians' gain need not be at our loss

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The India Today report is a bit strange. After lambasting the private sector operators over the main body of the report, towards the end, the reporter has added as below:

"This is not to say that privatisation has been an unmitigated disaster. The reason the Nigerians are so interested in the Delhi model, for example, is the enormous success achieved by private discoms in reducing transmission and distribution (T&D) losses. At the time of privatisation, the Delhi Vidyut Board's T& D losses were running at a staggering 52.3 per cent. That means that half the power the Board was buying and supplying did not show up in its billing. While technical transmission losses may have accounted for at best 8-10 per cent of this, the rest was, to put it bluntly, being stolen. That figure has been reduced to under 20 per cent. That is a signal achievement. Discoms have also enhanced efficiency in metering and billing".

And, while Mr pdk has highlighted all the negatives, his deliberate omission of the positives, shows very clearly where he is coming from.

My response to the others issues raised are as below:

reduced AT&C losses are easily matched by public utilities like BESCOM.

what about the other parameters?

Others are because the Tatas have their own power generation company etc

Amongst BESCOM sources are Sharavati Hydel project, where the generation cost is in tens of paise now.

CAG reports

These pertain to period ending 2009-10, and they need to be studied in detail to understand what exactly they say. Posting select excerpts from them to further one's stand, is a time tried tactic, which though does not help enhance one's credibility. An analysis of the position obtaining then was attempted by me here. Yes, the transition period had been difficult, but largely on account of what the India Today reporter himself has stated as "half- hearted privatisation can end up being a disease worse than the cure", which again, our friend Mr pdk has conveniently omitted. Apparently, there has been an awakening on the part of the Delhi government since then, as reflected by the figures listed by me in the opening post which has not been challenged by anyone yet.

There have been many demands raised by consumer groups, the latest by the Residents Welfare Associations (RWAs) of the capital, for an independent and neutral audit of the accounts of the power distribution companies. The apex association of RWAs has even moved a division bench of the Delhi High Court seeking a court order for an outside audit. The reason for this level of outrage and disbelief of claims by the government and the distribution companies are not far to seek.

The following excerpts, from the post linked in the above para, will explain the general approach of the RWA lot - "At a gathering of Socialists (not the genuine ones), convened essentially for privatisation bashing, that I attended a few years back, a lady went on to blame TATA’s and Reliance for the faulty meterings in New Delhi, after they took over the distribution, and went to lament that A/C, which she termed as a necessity in the Delhi summer, has now become unaffordable for even the middle classes. The fact of the matter, however, is that the consumers in Delhi had so far been ‘managing’ the government-owned DESU very well, and, with the private sector players taking over, the consumers are now having to pay the actual costs".

Besides, the regulator is there to keep a tab on the doings of the private players.

Far from seeing a palpable improvement in service quality and delivery and a reduction in costs - the main promises made while justifying the power business - they have seen a sharp increase in power tariffs, falling service quality and growing outages and shortages. In other words, privatisation - as far as consumers are concerned - have made things worse, not better.

flies in the face of the data available, at least in the areas served by TATAs. I don't have the data pertaining to the other areas.

The matter of monopoly

has already been addressed by me in my 2nd post (on this blog)

In Mumbai, for instance, the stateowned BEST sells power at a lower cost to its consumers than its privately owned rival,

needs corroboration, particularly when you have the MERC overseeing the functioning

has a comparable or better record across most service delivery parameters, and manages to meet the government's 'social obligation' of providing power to economically weaker sections of society

The MERC ensures power supply to all customers by all suppliers, irrespective of whether private or public, and at rates fixed by MERC. So, when saying 'meeting social obligations' if it is means allowing of free tapping of the power lines, one may be sure, the private players will not easily allow for it.

Admittedly, it is doing so at a huge loss. But then, the private discoms claim to be losing money too.

The difference is that BEST is sustaining losses (huge) year after year, which then have to be passed on to the citizens in the form of all kinds of taxes. As compared to that, the private players make out their cases to the regulator, and based on merits, the regulator revises the tariff, and their financials turn to green. It is when the decisions are delayed that you have the problems. And, I hope nobody expects the private players to keep operating under losses.

Well, the Nigerians' gain today is unfortunately our loss. But, it could very easily be everyone's gain. I am sure the politicians will realise it soon, so will the babu's; but, perhaps never the 'mai-baap sarkar'/ 'vested interest-ed' walla's.

Muralidhar Rao
pdk's picture

SOME TIPS ON SHARING DATA AND OPINION (formatted)

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  •   When one is quoting data, one should always note the source.  There is a big difference between the following two statements:
Linked here is a ppt presentation on the transformation of the Delhi power supply scenario at least in those parts coming under Tata Power Delhi Distribution Ltd (TPDDL)...
and
 
Linked here is a ppt presentation (provided by Tata Power Delhi Distribution Ltd) on the transformation of the Delhi power supply scenario at least in those parts coming under Tata Power Delhi Distribution Ltd (TPDDL)...
 
I recommend that you alter the original post to add that information, instead of stating the source in a comment.  Many people may not notice it.
 
  •  I'm presuming Mr S L Rao is obtaining some monetory benefits from Reliance.  So when he makes any statement about that company, that statement should be accompanied by a note that he is obtaining monetory benefits from that company.  People can then decide how they want to view his statement in light of that fact.

 

  • It is also very strange that Mr S L Rao gives a blanket approval to the Delhi privatisation model, when the Delhi government has been forced to bailout one of the companies to the tune of Rs 500 crores. 

 

  • On all your posts that talk about private power companies running power utilities, you should always add a note that you are liaising for the private power companies in order to further their business interests.  Because what you are doing is lobbying, though you may/may not be getting any benefits as of now.  It helps people to know where you are coming from. 

 

  • I am an ordinary citizen with no affiliations to either privatre or public power (or any other utility) companies or manufacturers.  No vested interests whatsover. 

 

Rgds,
 
Dinesh.
pdk's picture

Strange Datum

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Could more light be shed on this please?

>>>>No of consumers went up by 69.1% (from 700 to 1184).

Tata Power Delhi Distribution Limited supplies power to 50 lakh consumers as per their website.  What is this business of 69% increase from 700 to 1184?  

Rgds,

Dinesh.

murali772's picture

interests and vested interests

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Terms like liaising/ lobbying etc can apply when a person is getting some benefit from the companies involved. I am not getting any benefit as of now. But, yes, I hope to get the benefit of better power supply when the private players come in, like the citizens of Mumbai, Kolkata, Ahmedabad, Surat, Greater NOIDA, and now Delhi are already enjoying. But, that benefit will be universal, and therefore can't be termed vested interest.

On the other hand, apparently your only interest appears to be to subject everyone to the 'at best mediocre' (dis)services of the public sector monopoly service providers.

And, I can't bother to check whether Mr S  L Rao or whoever is on the board of Reliance or whichever company. The press quoted him (I have given the link to that), and I picked it up from there. So, you can advise the press on such matters, if you so wish.

Muralidhar Rao
pdk's picture

Gensets, inverters, etc still required

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Scheduled outages for 8 Feb in TPDDL (link):

 

Power Update - 08 February 2012

February 8, 2012

 

To ensure stable and uninterrupted power supply and no equipment failure or breakdown, augmentation and maintenance work will be carried out in the areas detailed below. Due to this, the Electricity supply may be affected on Wednesday February 8, 2012

 

1. District: Badli

Areas affected:  Gali No.1,4 & 7 Samaypur, Bhagwan Pura (10:00 AM to 6:00 PM)

                               Part of Village Badli (10:00 AM to 5:00 PM)

                               Master Mohalla & Libaspur Village (11:00 AM to 4:00 PM)

 

2. District: Bawana

Areas affected: Dariyapur (10:30 AM to 11:30 AM)

 

3District: Civil Lines  

Areas affected: 12, 13 & 14 No Rajpur Road & 12 No Rajniwas Marg (10:00 AM to 2:00 PM)

                               Part of Nagia Park, 27 – Block Shakti Nagar Nagia Park Office,13&17 – Block Shakti

                               Nagar, Hanuman Mandir Shakti Nagar (10:00 AM to 5:00 PM)

                              

4. District: Keshavpuram  

Areas affected: Part of B - Block Keshavpuram (10:00 AM to 4:00 PM)

                              Part of Wazirpur Industrial Area (10:00 AM to 6:00 PM)

 

5. District: Sultanpuri     

Areas affected: P-4 Sultanpuri (10:00 AM to 5:00 PM)

 

6. District: Model Town   

Areas affected: Part of Outram Line (10:00 AM to 5:00 PM)

 Part of A – Block GTK Model Town (10:00 AM to 3:00 PM)

 

7. District: Moti Nagar    

Areas affected C - Block Mansarover Garden (10:00 AM to 5:00 PM)

                             Part of Plot No 63 Rama Road (10:30 AM to 3:30 PM)

                             Part of A - Block Naraina Vihar (11:00 AM to 3:00 PM)

                               

8. District: Narela 

Areas affected: Part of I-Block Narela (10:00 AM to 5:00 PM) 

                              Khadi Assram (10:00 AM to 4:00 PM)

 

9. District: Pitampura 

Areas affected: Part of Raja Park (10:00 AM to 2:00 PM)

                              Parts of MD Block Pitampura (10:00 AM to 4:00 PM)

                              Rajdhani Enclave & Part of MP Enclave (10:20 AM to 4:20 PM)

                              Bannu Enclave (10:00 AM to 6:00 PM)

 

10. District: Rohini  

Areas affected: Gopal Vihar,A,B,C & D - Block Vijay Vihar Phase – 2 (10:30 AM to 4:30 PM)

                              Pkt D-10 & D-13 – Blocks Sector – 7 (10:00 AM to 2:00 PM)

                              ICICI Bank Sector – 9 (1:00 PM to 5:00 PM)

 

11. District: Shakti Nagar   

Areas affected: Part of Shazada Bagh (10:00 AM to 5:00 PM)

 

12. District: Shalimar Bagh    

Areas affected: Part of Shalimar Bagh (10:00 AM to 5:00 PM)

pdk's picture

Mumbai consumers are like "free electrons"

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Mumbai consumers caught in Reliance, Tata power play

M A Choudary, an electricity contractor from the northern suburb of Malad East here, 
has had problems in assisting his clients who want to shift from the Reliance 
Infrastructure network to Tata Power.
He says Tata Power rejected many applications despite the necessary documents having
 been given. “The payments have been made last month. But, no action has been taken. 
Officials from Tata Power even call these applicants, asking them not to make the 
shift,” he says, showing a fat bundle of rejected applications with signed cheques. 
The reason, he says, is that these consumers do not bring in huge business, as they
 consume only 100-150 units of electricity every month.
 

Rgds,

Dinesh.

murali772's picture

shift peculiarities

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When TATAs in Delhi increased their customer base from 700,000 to 1184,000, without any kind of discrimination whatsoever (anybody could have seen that I had missed out the zero's, if required by looking at the ppt presentation; but, you would choose to score brownie points even there - anyway, I have since effected the correction), if such instances have occured in Mumbai, there must be some peculiarities there.

Muralidhar Rao
murali772's picture

genset as standby/ mainstay

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The difference between Delhi/ Mumbai and Bangalore is that the gensets there are stadby; whereas here they are the mainstay.

Well, it must be conceded that the supply is a lot more steady of recent. But, given the constraints listed out here, how long can it remain so? And, that's another of the major objectives of the reforms.

Muralidhar Rao
Mithun Chakraborty_SrMgr_Tata Power Delhi Distribution Ltd.'s picture

PRIVATIZATION DEBATE- TRANSFORMATION OF DELHI DISTRIBUTION

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Privatization can only be a means to an end (of a responsive utility providing 24X7 reliable power at optimal prices) and not an end in itself. Consequently, the debate on benefits of privatization is a healthy one.

Any utility, private or otherwise, which can ensure reliable 24X7  power at optimal prices and is responsive to consumer requirements, be it expeditious new connection installation, minimization of complaints and prompt resolution thereof would be a good utility/model to emulate.  I believe that  Tata Power Delhi Distribution  has delivered on all the above counts. The privatized Delhi Discoms are probably amongst a handful of Discoms across the country which have contracted adequate generation capacity to meet their consumers' present and even the next 3-4 years' peak demand, thereby ensuring that their consumers are never load shed due to inadequate tie up of Power. The Consumer Tariffs in Delhi are amongst the lowest across the metropolitan cities of the country.  The transformation brought about by Tata Power Delhi Distribution in its Licensed Area is recognised both nationally (Govt. Of India, etc.) and internationally (national Govts / utilities, reputed peer utilities evaluation organizations).

While their cannot be an end to this excellence journey , the increasing consumer satisfaction levels as evidenced through independent third party consumer satisfaction surveys and also corroborated by a survey conducted by the Delhi Electricity Regulatory Commission are a testimony of the increasing consumer appreciation and satisfaction with Tata Power Delhi's performance.

Eventually, rather than generally  discuss performance of privatized Discom - Tata Power Delhi Distribution vs State owned Discoms, it would be appropriate to look at standard performance metrics such as AT&C loss reduction and levels thereof, System Availability, Reliability Indices, Transformer Failure rates, billing accuracy, level of metering, time taken for providing new connection, Mean Time To Repair, Street Light Functionality etc. to understand comparative performances of Tata Power vs. others. I believe that on each of the above metrics, Tata Power Delhi Distribution's performance has been far superior than that of other comparable State owned Discoms.

murali772's picture

Sensible, and politically correct too

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The Sheila Dikshit Government on Monday gave nod to grant a subsidy of Re1 per unit up to monthly consumption of 200 units of electricity with effect from July 1, 2012.  

A communiqué from the Chief Minister’s office stated that this decision would benefit about 20 lakh domestic consumers out of a total of 34 lakh consumers.

Following severe attack by the Opposition over hike in power tariff, Dikshit said: “The government is fully concerned about the needs of the middle class and poor families. It is the only state in the country to offer maximum subsidy of Rs 40 on LPG cylinders from 2007.”

Dikshit said the state government had also been providing subsidy on limited consumption of power across all sections of society with an aim to encourage judicious use of power. Following the announcement of the Delhi Electricity Regulatory Commission (DERC) to hike power tariff from July 1, the government has been mulling over relief measures for domestic consumers and it has decided to grant a subsidy of Re 1 per unit up to consumption of 200 units per month. The government will allocate Rs 222.40 crore towards this purpose.

“200 units are enough to power at least two fans for 20 hours a day, two tube-lights for six hours a day one TV for four hours a day, one refrigerator round-the-clock and one water pump for an hour or so,” Dikshit said.

Dikshit said that Delhi was the only city in the country where uninterrupted power supply was maintained and even the revised tariff was much lower than other metro cities.


For the full report in the New Indian Express, click here.

With input costs for the power suppliers going up considerably, it is inevitable that tariffs have also to go up simultaneously. This is not difficult for anyone to understand - not even for our GoK, and the KERC. But, the difference between how the Sheela Dixit government and the DERC act, and our own GoK/ KERC combo does it, is in the speed of decision making. In our case, by the time a decision is arrived at, it is already time for the next revision (check this), with the service providers (the government-owned ESCOMS) carrying on a hand-to-mouth existence in the meanwhile, leading inevitably to its deleterious effects on the quality of supply, and thereby the increased dependency on stand-by equipment.

Very obviously, the skills and effectiveness of the Delhi private sector players in making out their respective cases have made the difference, as compared to the generally lackadaisical approach of our ESCOMs, and therefore of the GoK and the KERC (though, of course, GoK and KERC can be lackadaisical in their approaches independently too). The Manivannan factor has admittedly made a change of recent, though, the important question that then arises is as to whether it will last beyond his term.

Whatever, having got used to the DESU/ DVN regime, where tariff revisions were a no-no irrespective of however high the input costs have gone up in the meanwhile, the 'janata' is not quite ready yet to accept the increases, even though it is beginning to enjoy the benefits of uniterrupted supplies, and consequent cost reductions. Sheela Dixit is apparently confident that she can educate the janata on that aspect too soon enough, and that the subsidy regime will not have to last too long. All in all, a very sensible, as also politically correct move, one may say.

Besides, as compared to the near one year time that the GoK takes to settle the ESCOM subsidy bills (check this), in Delhi, one can now expect a more professional dealing between the customer and the supplier. I would attribute it undoubtedly to privatisation of distribution.

Further, resulting out of the financially robust business regime, the power suppliers will become strengthened to get better deals from their customers, a large part of which they could pass on to the customers, supervised by the DERC. For all you know, the tariffs could even go down as the overall efficiency improves. But, of course, in order to encourage conservation, there has to be a limit there.

Muralidhar Rao
murali772's picture

change pangs

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I have extracted below excerpts from two ToI reports to highlight the pangs the Delhi "aam aadmi" are seen to be suffering from because of the changed regime, where they are now required to pay the actual costs:

Report 1: Two weeks after announcing his plans to confront the Delhi government on inflated power bills, activist-turned-politician Arvind Kejriwal and his team restored electricity connections of two households on Saturday. In both the cases, power supply was disconnected against non-payment of bill.
    
Kejriwal kick started his ‘bijli-paani’ campaign early in the morning by restoring electricity connection of a labourer Bana Ram’s house in Tigri Colony, Khanpur. Ram’s power supply was disconnected on Friday morning against non-payment of bill (dated September 12) amounting Rs 15,166.
    
Ram, who lives in a cramped two room house with a barsati along with his two sons and three daughters, claimed that he missed the due date to make payment as he could not arrange for money. “In August, I paid a bill of Rs 10,000 after borrowing money on loan. This time I did not know how to manage it,” said Ram (70), a construction worker who earns between Rs 7,000 to 8,000 per month. His house has three air coolers, two fans, a refrigerator and four TV sets.

    
For the full report, click here

Report 2: However, discom sources say that on Friday, the day Chand died, they were undertaking a routine mass inspection in the area to detect power-theft. "On inspection of Kailash Chand's home, the electricity meter was found by-passed and a power theft of around 5KW of power was detected at the premises. Subsequently, according to DERC guidelines, the electricity of the premises was disconnected," said the source. The billed amount at Chand's house was Rs 550, which the discom claims was because of the meter being by-passed.

- - - Bachi Devi said her struggle for a meter had been on since 2008. "We pull in the wires for the connection. At times we pay Rs 200 to a local guy. However, the power is disconnected every time on the ground that we are stealing power," she said.

- - - Discom official said, "Najafgarh accounts for almost 45% of power theft. Regular enforcement inspections are conducted and people found with tampered or faulty connections are booked."


For the full text of this report, click here.

In Mumbai, even Dawood Ibrahim's henchmen living in Dharawi and Sena bigwigs of Matoshri have from long gotten used to paying bills raised by the same Ambani company well on time. Apparently, the Delhi lot have gotten used to the theft culture under the government dispensations from long, and it is taking time for them to accept the realities.

Yes, there perhaps are some questions about the way the regulatory authority has handled the Ambani company's claims at the time of tariff fixing, and being a finance man, one would have expected Arvind K to take up issues the DERC. But, having joined politics, I expect he now finds these ways bring him more into the limelight.

It is inevitable that the citizens of Bangalore as also other cities will have also to go through these change pangs in the not-too-distant future. The earlier it is done, the lesser will be the impact. But, as far as the proper bill paying consumer is concerned, the additional costs will eventually balance out because of better quality of supply and lesser dependency on the much costlier genset power, therewith.

Muralidhar Rao
murali772's picture

Lutyen's Delhi insulated

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He (Arvind Kejriwal) claimed that MPs and former MPs owe huge amounts to power companies but their connections were not disconnected. "Poor people are being terrorized," he said.

For the full report in the ToI, click here.

This is indeed true. Realising that, once the job is handed over to the private players, they will not be able to continue in their old ways, the politicos very conveniently retained Lutyen's Delhi under the Delhi Vidyut Board regime. And, they carry on in their old ways, each accumulating bills in their lakhs, in spite of their being based perhaps on old rates, adding to the tax payers' burden.

In fact, the very act of the politicos resisting privatisation of power supply to areas where they reside, confirms that the answer to the whole problem lies in privatisation (check this)

What IAC should be doing is to demand that, and that people like Arvind K, a highly qualified engineer-cum-administrator, be inducted into DERC, the regulatory body, instead of pursuing the totally disruptive civil disobedience agenda.

And, like-wise with all service sectors and regulatory bodies across the country.
 

Muralidhar Rao
abidpqa's picture

Regarding report 1, Three

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Regarding report 1,

Three aircoolers will consume 150x 4 x 8 about 5 kwh.
Refrigerator about 300x12 4 units
TV 4x100x10 about 4 units.

So his consumption is about 15 x30 and bill should be about 450x5, that is about Rs. 2500. then how he was charged Rs. 7000? The laws are favoring private players.  We have to pay the bill and then only file a case. They count on the fact that very less people bother to complain. All the private players, in telecom, etc. always send inflated bills. They activate services that you have not requested. As I have experienced, in the case of postpayed connection, they will not disconnect the connection after your request and continue to send you bills.

murali772's picture

political positioning

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@ abidpqa  -  Apparently, the bill includes arrears.

My nephew works for Reliance in Mumbai. I have bill copies for similar consumption patterns for both Mumbai and Bangalore. They are comparable.

The big difference is that very few residents in Mumbai even know what a genset is. They don't need to, since the supply is generally very reliable. And, the savings on that account, compared to a Bangalore consumer who pays almost three times for his back-up power, is huge.

The consumers are obviously upto theatrics, encouraged by political positioning of the IAC lot.

The following quote from a post by a friend on a google-group, I feel, is most relevant in this context:

Yes, everyone is entitled to own and use an AC or a Mercedes for that matter. Please be prepared to pay the bills however.

Let us say that a person buys a car, 2 -wheeler or AC on EMI hirepurchase. He does not pay the first installment. Do you support re-possession or not ? Or are you ready to say -- everyone is entitled to anything even if they cannot pay for them ? That way lies only anarchy.

What Arvind is doing is an insult to the Crores of poor people in this country who are living with dignity and honesty and actually paying for what they use and eking out a daily grind.

PS: The ways of the private Telecom players can be the subject of another blog, if you wish to start one. But, let's not mix issues here, please.

 

Muralidhar Rao
murali772's picture

better regulation - the need

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Here is a report from Business Standard which seems to question the neutrality of the regulator.

And, here is a report from today's New Indian Express, which amongst other things says "KERC had announced an average 13 paise hike across consumer classes as opposed to a hike of 73 paise proposed by BESCOM in April. In October last year, the KERC had announced a 21 paise hike as opposed to a demand of 88 paise by BESCOM".

So, even the government-owned BESCOM, with none less than the redoubtable Mr Manivannan at the helm, has been asking for fairly substantial tariff increases. As such, we all need to accept that these utilities cannot continue to be operated the way they have been all these years, and for that, we need to be paying higher tariffs. But, when the regulators (mostly ex-bureaucrats) choose to play to the galleries, and allow just some 10 to 20% of the increase demanded, a BESCOM can possibly continue operating, with its borrowings being backed by government guarantees, but not the private operator.

It is very likely that Mr Brijendra Singh, former chairman of the Delhi Electricity Regulatory Commission (DERC), quoted in the BS report is one such bureaucrat - I am only guessing.

What is necessary therefore is more objectivity and transparency in the functioning of the regulators, which can perhaps happen with the induction of at least one qualified person (like Arvind Kejriwal) from the civil society in each of the regulatory bodies.

Muralidhar Rao
kbsyed61's picture

@Murali - You have said it!

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Murali Sir,

I loved what you said and you said 200% truth.

"...What Arvind is doing is an insult to the Crores of poor people in this country who are living with dignity and honesty and actually paying for what they use and eking out a daily grind..."

It is not only the self-appointed civil society reps who are insulting but every political dispensation is insulting the common sense, honest, loyalty, patriotism and hard work of majority of the Indians.

These very hard working citizens have spent their lives to improve the lives for their children thereby helping India improve. You should ask some of our senior citizens who have witnessed the life before and after Indian Independence.

While I was studying, In Ramanagarm, I used to have interesting conversation with the Owner of Hotel (Opp to old Railway Station). He used to narrate the lives of millions who used to go hungry for days together. He used to narrate, when India got independence, barring few households, in his village people had nothing to eat. Fortunately with their hard work, they have ensured their children got educated and earning their livelihood. He didn't had any complaint about Govt not doing much for him, but he was proud that nation has come too far from those difficult days. I would credit the progress of the country to such hard working Indians who lived and died in dignity rather than indulging in such theatrics of anarchism.

That generation to me was real patriots who always aware of their dues and paid them at the earliest. I remember my father would ensure that bills are paid before the due date. There were times KEB used to cut the electricity for non-payment. But same day or next day arrangements would be made to pay and get the electricity back. This was the culture in many houses I knew of.

They may be not much educated and intellect as we are today, but they were conscience of what is right and wrong. They tried their best to do the right thing - even if it had to choose the difficult option.

It looks like we, though are more literate, knowledgeable and intelligent then our seniors, but we have not learn what is right and wrong. We are treading the path like the saying goes - "If knowledge doesn't help you decide right or wrong, you are no better than that donkey who carries loads of books but can't make use of it."

Ordinary "Aam Aadmi" is much more dignified, loyal, patriot and honest than what these politicians can think of them.

 

idontspam's picture

How is this insulting?

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So Syed how is this questioning, by the self apponted civil society, of a few people, who are getting richer bypassing/misusing the same rules the rest of us live by, insulting to you?

kbsyed61's picture

Exhorting people to defy the rules is insulting!

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IDS,

Questioning shady deals, corruptions is not the insults that I and Murali are alluding. Exhorting public to defy the authorities, taking law into own hands is certainly an insult to the those crores of hard working Indians who play by rules. System doesn't get fixed by bypassing or going around it. It has to be fixed by doing the repairs it is needed. It is a long road but no escape from that. IF Election commission can be reformed, why the pessimism for other sectors of governance and public services.

The insult I am referring to is the whole system price/tariff regulation system that every state and central governments pursue to garner votes. People in India, as in rest of the world do understand what is a fair price of anything from electricity to Khutimeer.

The insult I am referring to is the lie that is being forwarded by NGOs, politicians promoting the tariffs which is lower than the cost of production/generation. They are insulting their common sense that by forcing the low cost regime today to burdened the tomorrow with high costs. West Bengal is classic example of that insult. The very people who Left Front and now TMC are trying to address, are rendering them more vulnerable than before.

 

 

kbsyed61's picture

A sane advice!

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Courtesy - Indian Express

"...Political parties, old and new, should consider the many things people want, rather than what they despise, and create a platform that seeks more than “yes or no” answers..."

murali772's picture

course correction badly needed

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In response to a mail I posted on OneBengaluru G-group, linking my post of the 10th (above), a certain Mr PB forwarded this link to the Delhi High Court order, and this link to a New Indian Express report, explaining Arvind Kejriwal's stand. To the same, I had no option other than to respond as below:

If you are telling me that the Delhi government didn't pay heed to the High Court order, and went ahead and allowed the DISCOMs to charge the higher rates, then yes, the government has a lot to answer for. Are they answering? They are not.

Besides, they (as also other governments across the country) are repeatedly seen to be breaking rules they themselves have set, apart from facilitating their cronies to do so at will and with impunity.

So, it's already a law-less situation. As such, who is anybody to question Arvind Kejriwal's act of re-connecting a dis-connected meter? I admit, I can't find fault with that argument.

Only, I dread to think what lies ahead.


This is exactly what I had meant when I had listed "q) fear that the Corporate sector will become all too powerful and an uncontrollable lobby" as one of my own fears about privatisation - check this. If the Indian corporate sector doesn't undertake the required course correction, even at this late stage, things are going to be difficult for the country as a whole.

Muralidhar Rao
murali772's picture

problems invariably lie with the governments

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Following a rigorous and thorough assessment process by the Department of Sustainability, Environment, Water, Population and Communities, Australian Federal Environment Minister Tony Burke announced that the GVK’s Alpha Coal Port Project at Abbot Point has been given a go-ahead.

- - - G.V.K. Reddy, Chairman, GVK, said: “This development is yet another milestone towards our goal to be the premier, most reliable coal supplier to the world enabling better lives". - - "We are the only coal developer in Australia to possess environmental approvals at a state and federal level that integrate the mine, rail and port, bringing to finalisation the Tier One environmental approvals that will significantly assist in the facilitation of opening up of the Galilee Basin. Importantly, we believe the overall assessment process has resulted in best practice environmental protection outcomes which we support wholeheartedly,” he said.


For the full report in the Business Line, click here.

This only goes to show that Indian Corporates can meet any kind of challenges, whatever the conditions, whoever the competitor, as long as the game is played on a level field. The Australian government stpulates stiff conditions, and the Indian company meets them. The Indian government leaves the conditions all very vague, so as to play favourites at the deciding stage, and we all land up in a soup. So, the problem clearly is with the government.

Muralidhar Rao
murali772's picture

very simply, the way to go

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Compared to most metros or even neighbouring states, Delhi enjoys the lowest tariff rates. At Rs 2.90 for 200 units a month and Rs 4.43 for 400 units, it is lower than Mumbai (Rs 4.91 and Rs 5.95 respectively), Bangalore and Kolkata. Haryana, with Rs 4.14 and Rs 4.60, is the lowest after Delhi.

While Delhi's power tariff has increased steadily for three years now — 22 per cent in 2011, 26 per cent for domestic consumers in 2012 and 3 per cent from February 1, 2013 — this is against a scenario of uninterrupted power supply. Not too long ago, Delhi's infamous power cuts could last anywhere from 30 minutes to seven hours, and generators or inverters were vital to survive.


For the full report in the Indian Express, click here.

Bangalore is pulling along currently just because of the dedication of the current team under Mr Manivannan. But, that cannot be a sustainable model. That's where Delhi is different, and that clearly is the way to go for Bangalore and other cities too.

Muralidhar Rao
kamalakar pandit's picture

very true sir, Mr.Mani Vannan

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very true sir, Mr.Mani Vannan is very strict and honest officer...dont understnad why such officer do not come to infrastructure dept.....we miss officers like him in most of the Dept's.I remember how people protested in Hubli/Dharwad when he was moved out ...

murali772's picture

Modi set to follow Sheila Dikshit example

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Although, as stated below (for the full report in Business Today, click here),

The state (Gujarat) electricity board posted its first profit of Rs 203 crore - after tax - in 2005/06. By 2010/11, net profit had risen to Rs 533 crore, while T&D losses had fallen to 20.13 per cent. Tariff collection efficiency is close to 100 per cent. Private players, once reluctant to invest in Gujarat's power generation, are now rushing in: of the power plants with a total installed capacity of 16,945 MW coming up in the state, 6,864 MW - or roughly, a third - is by the private sector. "Abundant power is a major USP of our state today," says minister Patel.

the distribution remains inefficient, as per these extracts (from the same report)

A few worries remain. Though T&D losses have fallen, they are still higher than those of the southern states such as Andhra Pradesh, Karnataka, and Tamil Nadu.

And, inspite of (extracted again from the same report)

Also the manner in which pilferage was tackled is interesting. I know how the CEO of a state-run distribution company that supplied to one half of a particular city in Gujarat was fully empowered to take all measures to match the low T&D losses of a private sector company that supplied to the other half of the city.

So, Modi is now set to follow the Delhi example (going by these extracts from Business Standard report - to access the full report, click here).

Looking at the successful private sector power distribution models operational in other parts of the country, the Gujarat government is understood to be working towards partnering with private players in the power distribution area. - - - Private participation had reduced distribution loss significantly in places including Delhi, Bhiwandi in Maharashtra besides several others. - - The same could be replicated in parts of Gujarat as well. - - - - The state already has successful private sector distribution models in Surat and Ahmedabad. This could boost prospects for other regions to have private participation as well - - -. Currently, Gujarat has two power utilities operational under private holdings namely, Surat Electricity Company Ltd and Ahmedabad Electricity Company Ltd, both being controlled by Ahmedabad-based private player, Torrent Power Ltd.

What are other states (Namma Karnataka, in particular) waiting for?

Apart from all of the above is the following recommendation of the Planning Commission (GoI) Task Force on "Private Participation in Power Distribution" - July 2012 (full report may be accessed here)

Conclusion: Given the importance of power sector to the economy, the paucity of budgetary resources and the deteriorating financial health of the distribution companies, it is important to restore order in the power distribution sector. Private participation in the power distribution sector should be pursued in order to attract investment and to harness the efficiencies of the private sector. In this regard, the Task Force endorsed both the models, ie PPP model, and the Franchise model, leaving it to the states to choose that they think more suited to their needs.

Muralidhar Rao
murali772's picture

the contrast

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The Bengaluru/ Karnataka situation:
On Monday, the Udupi Power Corporation Ltd (UPCL) shut down generation at one unit of 600 MW citing coal shortage. In January, UPCL had stopped generation in both its units citing coal shortage and the issue was resolved temporarily with the Chief Minister’s intervention. However, electricity supply companies (ESCOMs) owed UPCL upwards of `1,400 crore in January and efforts have been on to settle the bills. UPCL was locked in a battle with ESCOMs  over tariff.
(for the full report in the New Indian Express, click here).

The New Delhi scenario:
Meanwhile, State Power Minister Haroon Yusuf said Delhi was the only state which had 24x7 power. He further stated that the power deficit here was just 0.1 per cent whereas in Madhya Pradesh it was 3.5, Karnataka 14.9, Bihar 21.0 and Jharkhand 6.8 per cent. Prior to the privatisation of the power sector, the state had witnessed violent demonstrations over power cuts that lasted for several days.
(for that report again from the New Indian Express, click here).

The Aam Admi party has alleged irregularities in the tariff fixing exercise in Delhi. While this has been contested by others, apparently, all is not quite well with the functioning of the regulator, and it certainly could do with some tightening up, which is perhaps where the Civil Society's concentration should be, as compared to AAP's politicking.

In contrast to this, in Bangalore however, the problem is perennial, inspite of having the redoubtable Mr Manivannan as the BESCOM MD, since he just can't do a thing about the government not releasing the huge subsidy dues.

Isn't the way out of the imbroglio plain and simple?

Muralidhar Rao
murali772's picture

may be time to throw out the Ambani company

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With long outages threatening to become a major political issue ahead of assembly polls, a worried Delhi Chief Minister Sheila Dikshit has asked Anil Ambani, Chairman of Reliance Infrastructure which runs two power distribution companies, to take steps to “rectify” the problem and ensure round-the-clock electricity supply.

In a letter to Ambani, Dikshit said the power supply by BSES Yamuna Power Ltd (BYPL) and BSES Rajdhani Power Ltd (BRPL)- has “worsened” in the city contrary to expectation of improvement and asked him to take remedial measures at the earliest.

- - - Dikshit said failure of BSES discoms to pay up the dues and strengthen the distribution network besides besides low consumer satisfaction have the potential to “derail” the power sector reform in the city. - - - The city has been facing power cuts ranging for upto 10 hours and BJP has been stepping up attack on Dikshit for the long outages. Supply of power and water are likely to be major issues in the run up to the assembly polls slated for November. - - - The Chief Minister had last week warned BRPL and BYPL of punitive action against if they fail to improve supply immediately despite adequate availability of electricity.


- - - Power Secretary Shakti Sinha said the city has more power than the current demand and blamed the long outages on local faults and other technical problems in the distribution network of BSES discoms which supply power in 70 per cent areas of the city.

He said no complaint of long power cuts has been received from areas served by Tata Power Delhi Distribution Ltd (TPDDL). In the letter, Dikshit said the TPDDL, working with the same regulatory framework, never defaulted on payment of dues to power generation and transmission companies.


For the full text of the report in the First Post, click here.

Well, the poor performance of the Anil Ambani led companies, as compared to that of the TATA company, has been the pattern from long. Now that it has become too stark for tolerance, threatening to derail the reform process itself, perhaps it's time for another player, say a Torrent or a CESC, to be facilitated to take over from Ambani.

Muralidhar Rao
kbsyed61's picture

Bad and Good everywhere!

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Well, the poor performance of the Anil Ambani led companies, as compared to that of the TATA company, has been the pattern from long.

This only shows that there are good and bad everywhere. Private sector is not immune to that. It is self testimony that privatization doesn't necessarily means everything will be alright and that is where govt's regulatory need comes in. It is also a pointer to establishment of regulatory or supervisory body infrastructure before a sector is privatized to ensure that the service providers, private or govt owned entities are delivering on the SLAs.

pdk's picture

The Long and Short of it

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He said no complaint of long power cuts has been received from areas served by Tata Power Delhi Distribution Ltd (TPDDL).​​

One persons long is another's short and someone else's short is maybe long enough for someone who's watching too many cheerleaders.  

Subjective subjects indeed.  

pdk's picture

Delhi's modern day Mary Antoinette

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Cut down use of power if you can't afford tariff hike: Delhi Chief Minister Sheila Dikshit.  Of course.  Don't buy a Merc if you can't afford it.  After all, the discoms have to make a killing, oops sorry, living.

Meanwhile, your tax money will be siphoned off to the poor discoms.  From the same report:

The Delhi government had last week offered a bailout package to Tata Power Delhi Distribution Ltd (TPDDL) by infusing fresh equity of Rs. 245 crore into the company to help it tide over its financial crisis. The government has 49 per cent share in TPDDL.

Over a year ago, Delhi government had offered a similar bailout package to Reliance Infrastructure-backed discom BSES by infusing fresh equity of Rs. 500 crore to the company.

Reliance had infused Rs. 520 crore and the total amount of Rs. 1,020 crore was used for getting a loan of Rs. 5,000 crore from IDBI bank.

The Delhi Electricity Regulatory Commission (DERC) had a few days written to the Chief Minister seeking a bailout package for the private power distribution companies. 

pdk's picture

The context is everything

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Forgot to mention the context in which the Delhi CM made the above comment.  From the same NDTV report:

The power tariff in Delhi was hiked by 22 per cent in 2011 and again increased by 26 per cent for domestic consumers in July last year. The tariff was again hiked by up to three per cent from February 1 this year.

murali772's picture

horse and cart required together

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@ Syed -

This only shows that there are good and bad everywhere. Private sector is not immune to that. It is self testimony that privatization doesn't necessarily means everything will be alright

Is there a need to say that, again and again?

It is also a pointer to establishment of regulatory or supervisory body infrastructure before a sector is privatized

This is another fallacy you keep repeating. The TRAI had been set up well before the telecom sector was opened out to competition from the private sector. But, for all of that, a A Raja comes along and messes up things by bypassing the TRAI. And, it was largely the rivalry between the strong players in the picture that led to the entire scam getting exposed. As such, opening up of the sector has to happen simultaneously with the putting in place of the regulator.

There is no end to the kind of fine-tuning of the framework that you can do; but, there will still be the gaps. And, when you do it in a vacuum, the gaps will be just bigger. These can only be filled based on learnings while in operation. This is what mature regulatory bodies like SEBI, RBI etc are doing on a regular basis. Initially, they too had floundered.

I hope I'll not have to go on repeating these.

Muralidhar Rao
murali772's picture

real bail-out examples

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Characterising these funds infusions as "bail-outs" is typical gallery play by the media. Now, both these companies took over totally run down systems from DESU, which needed large scale upgradations, which in turn needed large funds. And for that, they had necessarily to turn to the banks for loans, while also mobilising the matching owners' funds. Now, the Delhi government being 49% owners of these companies, they too had to bring in the additional capital, which was what the exercise was all about.

As compared to that, in the case of say a AIR-INDIA, with government being 100% owners, the entire amount to keep it going (not for expansion, mind you!) has to come from tax payers' money, with no bank ready to extend any more loan to it, since the liabilities from long standing at a far higher level than the assets. These are bail-outs proper, and rarely is there any accountability for them. Similar was the case with DESU, and if not for Madame Sheela Dikshit's quick actions, Delhi would have had to be abandoned.  

Bangalore's position is quite precarious too (check this). The BESCOM MD, Mr Manivannan, is having to stretch his resources to the limits to keep the show going. We need to pray he doesn't breakdown.

Muralidhar Rao
murali772's picture

the question of tariff increases

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Now, when a system that had been run down for decades together, requires to be upgraded, you need to bring in lots of funds. And, these funds have their costs, which need to be recovered, and hence the tariff increases. All the same, since this is a natural monopoly area, apart from its having certain social impacts (unlike say a hotel industry), you have the regulator. If he is found wanting in his functioning, please make an issue over it.

Whatever, for all of the Delhi discom tariff increases, I expect they are still comparable to those of BESCOM, not even taking into account the effective cost to a consumer for the much higher stand-by power costs incurred.

Moral of the story very plainly is to upgrade to a robust system right away, which a Manivannan will possibly do better than even the TATA company, IF the funds are made available to him. But, it's a very big IF.

Muralidhar Rao
Mithun Chakraborty_SrMgr_Tata Power Delhi Distribution Ltd.'s picture

Tariff Hikes...Bailout package...Power Supply situation

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While everyone is citing the recent tariff hikes in Delhi, it is pertinent to point out that prior to the last two tariff hikes in FY 11-12 and FY 12-13, the earlier tariff hike took place in FY 05-06 with a marginal 1% increase in FY 2008. Also, during the period FY08-09 to FY 12-13, the Power Purchase Costs increased by over 90% (from 2.86/unit in FY08-09 to 5.45/unit in FY12-13) while the tariffs (including the recent hikes) have increased by only 50% (Average Billing Rate excluding E. Tax increased from 4.52/unit in FY08-09 to 6.72/unit in FY 12-13) . On account of this variance in tariff hikes vis-à-vis actual costs being incurred, the accumulated Revenue gaps recoverable from future tariffs has increased from approx. Rs. 320 Crs in FY08-09 to Rs. 4700 Crs in FY 12-13 for TPDDL.For Delhi as a whole, the Regulatory Asset is over Rs. 20000 Crs and needs to be liquidated through appropriate tariff adjustments.

Secondly, equity infusion by Govt. should not be seen as a bailout as shareholders need to bring in money as and when required. Entire funding cannot be one only through loans. 51% of total equity has been infused by the private players in proportion of respective shareholding. Also, this equity infusion cannot be termed bailout as it is a commercial transaction as the shareholders who have infused equity (including the State Govt.) shall get a Return on the Equity invested, just like return earned by lenders for loans invested in the business.

Regarding the power supply situation, would like to point out that against an Average System Availability of 70% and a transformer failure rate of 11% in TPDDL during 2002-03, the current Availability is more than 99% with Transformer failure rates at mere 0.8% which is a testimony of the improvements made.

murali772's picture

validation of PRAJA's relevance

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 Thanks on behalf of PRAJA to Mr Mithun Chakraborty, Sr Manager, TPDDL, New Delhi, for posting the company's official views. It is a matter of pride for us when people like him and Mr Manivannan openly post openly on our site, as also a validation of our relevance as a platform for debates, across the board.

Muralidhar Rao
murali772's picture

would have preferred probing in the dark, I guess

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One persons long is another's short

I supppose the following from Mr Mithun Chakraborty (Sr Mgr, TPDDL) answers the above:

"Regarding the power supply situation, would like to point out that against an Average System Availability of 70% and a transformer failure rate of 11% in TPDDL during 2002-03, the current Availability is more than 99% with Transformer failure rates at mere 0.8% which is a testimony of the improvements made".

and someone else's short is maybe long enough for someone who's watching too many cheerleaders.  

As far as the above comment is concerned, perhaps the author is missing "probing in the dark" of the DESU days.

Muralidhar Rao
murali772's picture

what is regulatory asset?

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@ Mithun C

Regulatory Asset is over Rs. 20000 Crs and needs to be liquidated through appropriate tariff adjustments.

Can you elaborate on that, please? It is a large sum.

Muralidhar Rao
Mithun Chakraborty_SrMgr_Tata Power Delhi Distribution Ltd.'s picture

Regulatory Assets

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Inadequate tariff increases and also inordinate delay in tariff increases lead to accumulations of revenue gaps  which reflect the shortfall in the Company’s revenues billed at prevailing  tariffs and those chargeable by it to its consumers based on costs incurred during those year.  These accumulated recoverable Revenue Gaps are. Regulatory Assets which are recoverable from future tariff hikes.

 

kbsyed61's picture

Unintended consequences!

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Very rarely we hear about any government policy being appreciated by the ruthless media analyst and specially economic analysts. If A. K. Bhattacharya of 'Business Standard is to believed, though the GOI's bailout to DISCOM's had any success that was initially thought to be game changer, but the fear of availing the bailout has seems to driven the state DSICOMs to follow a strict fiscal discipline. The unintended consequences are noticed in terms of many state DSICOMs tightening their fiscal management and most importantly 'Tariff Hikes'.

"...Last year, for instance, as many as 31 states and Union Territories raised power tariffs by an average 16 per cent, an increase that came after a gap of about five years for many of them. Power tariffs were raised by states ruled by different political parties - by 37 per cent in Tamil Nadu, 30 per cent in Kerala, 28 per cent in Maharashtra, 24 per cent in West Bengal and 21 per cent in Delhi. At the same time, the aggregate technical and commercial losses for the discoms have also come down to 24 per cent, from 39 per cent in 2001-02..."

"...So, has the Union government's Rs 2 lakh crore bailout package failed? Not really. It has worked in quite a different way, simply because it came along with the strict enforcement of the fiscal responsibility and budget management legislation, which was linked to release of central funds to the states. The message is significant. The carrot-and-stick policy has, indeed, worked to a large extent not only for the states' finances, but also in forcing them to clean up the state discoms' finances in the coming months..."

 

Source - Business Standard

pdk's picture

The biggest hike being TPDDL

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Which works out to 57% in the last five years (the period quoted  in the above Business Standard article).  And not counting the Rs 20,000 crores still awaiting future tariff hikes :-)

 

murali772's picture

power tariff comparisons

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Which works out to 57% in the last five years

The corresponding increase in "power purchase cost" (PPC) has been over 90%. And, with PPC constituting over 80% of a DISCOM's input costs, is it any surprise that you have to have such levels of tariff hikes?

Then, the question arises as to why is there such a huge hike in the input costs. The main cost components are coal and its transportation - one handled by the government monopoly Coal India, and the other by another government monopoly Indian Railways. The answers then become very evident for those who want to see them.

Further, the regulatory asset for Delhi as a whole is Rs 20,000 cr; for TPDDL alone it is Rs 4,700 cr. How it has reached this level is explained by the following extracts from Mithun C's post of 9th June:

last tariff hike took place in FY 05-06 with a marginal 1% increase in FY 2008. Also, during the period FY08-09 to FY 12-13, the Power Purchase Costs increased by over 90% while the tariffs (including the recent hikes) have increased by only 50%. On account of this variance in tariff hikes vis-à-vis actual costs being incurred, the accumulated revenue gaps recoverable from future tariffs has increased from approx Rs 320 cr in FY08-09 to Rs 4700 cr in FY 12-13 for TPDDL.

The moral of the story plainly is to accept the cold realities as and when you are confronted with them, and to act upon them fast enough so that you don't land up overwhelmed by them later.

Also, if one is looking at tariffs, then the comparison needs to factor in the cost of diesel/ inverter generated power for the hours that grid power is not available. Haryana recently came out with an order that high end consumers wanting 24 X 7 power (against 18-20 hrs present supply) would need to pay one rupee per unit extra for their entire consumption.

A ppt on tariff vs PPC, as well as comparative tariffs across the country, including if you take into account reliability and availability of power supply, is attached to the opening post (source TPDDL).

Muralidhar Rao
murali772's picture

AAP's criticism on "regulatory asset valuation"

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Here is what Mr Arvind Kejriwal has to say on the "regulatory asset valuation of Rs 20,000 cr" in his letter addressed to Mrs Sheila Dikshit on 25th June '13 (the full text may be accessed here):

You have mentioned in your letter that I have used inappropriate language towards you during the Auto-rickshaw campaign. I do not agree with this.  You tell me yourself,  what words have I used which you did not find appropriate?  I do agree that I have mentioned on multiple occasions that you are a broker for electricity companies. But is that incorrect?  You have raised the electricity prices in Delhi randomly. This has helped Tata and Ambani's electricity companies to reap large amounts of profits. But they are so greedy for money, that they have manipulated the books to show a loss of INR 20,000 crores. The question arises, that if they have really lost so much money, then why have they not shut down their electricity companies?  I am sure you will agree Tata and Ambani have not come to Delhi to do social service, they have come to make money. Have Ambani brothers ever executed a business deal to lose money?  As soon as the Delhi Airport Metro line became unprofitable, the Ambanis ran away from that business. Then, why are they still in the electricity business, if they have lost INR 20,000 Crores? There is something fishy here. Entire Delhi population is demanding an audit of these electricity companies. But you keep raising the prices without any audit. You keep saying that you are ready to conduct an audit but electricity companies are not agreeing to it. We are unable to swallow this argument.  Who is the Chief Minister- you or the electricity companies? Why is our Chief Minister powerless and ineffective against these electricity companies? Why don’t you cancel their contract if they are not willing to submit to an audit? This is where people start to wonder if Sheila Dikshit ji is a broker for electricity companies. As soon as electricity companies declared a loss of INR 20,000 Crores, you went running to the Central government, asking for a financial package to bail out Mr. Anil Ambani. But when citizens of Delhi groan under the weight of increased electricity bills, you ask them not to use air conditioning, television and refrigerator.  It is these kind of words and actions that have convinced people that that you are in cahoots with electricity companies.

The discoms can content that these figures have been approved by the DERC, the body constituted specifically to look into such matters, and if anyone has a problem with it, he could pursue the matter with DERC. Whatever, the discoms would have done well to publish the full details suo motu on their web-sites. One expects at least the TATA's to do it, particularly considering the fact that this is a natural monopoly area.

Muralidhar Rao
murali772's picture

info largely available already

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The subject being of specific interest to me, I searched and found that TPDDL has already provided a lot of info on their web-site. Most can be accessed through the links below:
http://www.ndpl.com/
http://www.tatapower.com/investor-relations/pdf/TPDDL-ar12.pdf

Going by it all, apparently the TPDDL is doing a more than fair job, it is entrusted with, viz distribution of power. Further, considering the huge input and capex costs that have necessarily to be incurred today for providing quality power, their tariff levels can't be said to be high either; perhaps they need to be higher. So, if future tariff increases have to be contained, the answers have to be found in reducing the input costs. The biggest hurdles there are the two state-run monopolies - Coal India and Indian Railways (who transport the coal).

In Karnataka, there is the additional problem of subsidies and dues from government agencies, both of which go by the dictum of 'payable when able', if they are paid at all (check this).

Muralidhar Rao
murali772's picture

questions before AAP ministry

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Here's a write up on why the power tariffs in Delhi should be far lower than what they currently are (before they were slashed by the AAP ministry), alongwith an indictment of mostly the Ambani companies catering to about 70% of Delhi's population, and the Sheila Dikshi government and DERC for playing footsie with them.

The arguments are largely based on the fact that the distribution losses have been brought down from around 55% to 15%, and the benefit of this has not been passed onto the consumer. Such arguments assume that the loss reductions have happened without commensurate upgradation of infrastructure, which is the biggest fallacy, and where the question of "regulatory assets valuation" comes in (check the posts dated 9th June, and 10th June, '13, above, by Mr Mithun Chakraborty of TPDDL). Whatever, since a ministry has been ousted at the hustings on the basis of these charges, let there be a one-time CAG audit to establish the truth, as stated here. For all you know, the audit may reveal that even the pre-slashing tariff levels are unsustainable, and they will have to be revised upwards.

Also, for all the charges levelled by the AAP against Madam Sheila Dikshit, as being in cahoots with Suresh Kalmadi and the lot in the CWG scam, now apparently they are saying that there doesn't appear to be any proof of her involvement. The charges, as regards the power tariffs, were directed straight at her. As such, if the audit finds no wrong-doings on her part, will the AAP tender apologies apart from rewarding her for having improved (rather revolutionalised) the overall power supply scenario in the city?

Notwithstanding all of that, it needs to be mentioned that the performance of the Ambani companies has been far from satisfactory, compared to the TATA company, operating in identical conditions, which matter has already drawn our attention earlier (check my post of 5th June,'13 - above). The why's of it needs to assessed professionally by the new government, and suitable action taken, as needed.

The bigger question I would like to pose to the AAP ministry is when is it going to stop Lutyen's Delhi enjoying "cheap, unlimited, pay-when-able" power supply (check my post of 8th Oct,'12 - above)?

Muralidhar Rao
murali772's picture

why should anything hold up privatisation now?

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No AAP or BJP is contesting the fact that privatisation of power supply in Delhi has caused to reduce the distribution losses from around 55% to around 15% now. Isn't that alone a good enough reason to adopt the model for all cities, across the country?

Apart from that is the 99.9% system reliability, meaning, I expect, you can now dispense with the gensets, inverters, UPS devices, batteries, converters, emergency lamps, voltage stabilisers, candles, match-sticks, etc.

Further, if the CAG audit justifies the tariff slashing, the additional bonus is that you are going to be getting it all at far cheaper tariff levels than earlier. Even otherwise, the increase was only marginal, particularly considering the 180% increase in power purchase costs in the corresponding period.

In the face of all of these, if there is still resistance to privatisation, it necessarily has to be from quarters harbouring vested interests.

Muralidhar Rao
murali772's picture

Effective Regulation & Cross-subsidisation

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The text in 'italics' (below) are excerpts from an essay by Mr Arun Kumar, convenor of the AAP’s Committee on Economics and Ecology, published in The Hindu. The text in regular font are my comments. To read the full essay, click here.

How can profiteering by the private companies be checked? The accounts of the companies need to be checked by independent auditors and that is what the AAP hopes to do with the help of the CAG. But, what if the CAG, under political pressure, does not play ball? Can the private auditors be used? No, because they are usually in cahoots with the companies.

Now that the political powers have shifted, doesn't the answer lie in getting the DERC (regulatory commission) re-constituted with the empanelment of the right kind of people? Or, is it the author's case that the auditor fraternity can't be trusted at all?

Thus, at the end of the day, lowering power tariffs may only be possible if the government is willing to increase subsidies. The same may be the case for water. Those who are well-off in society often pay for others on the principle of ‘Ability to Pay’ or ‘cross-subsidisation’. The issue is whether this is fair.

With tariff levels already being much lower for lower levels of consumption, there is a certain element of cross-subsidisation built into the existing tariff structure. It can perhaps be increased to some extent. But, drastic subsidy increases are only going to promote wasteful consumption.

Muralidhar Rao
murali772's picture

sound reasoning

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Financial Express report (for the full text, click here):
Reliance Infrastructure spokesperson reacted strongly to Arvind Kejriwal's comment, saying "Reliance Group is extremely disappointed with the Delhi Chief Minister's tweet attacking our Group Chairman."

The BSES discoms, which are run by Reliance Infra, urged Delhi Government to "engage constructively" to find a solution to the power crisis and avoid "extreme hardship" to Delhi citizens from next week. - - "Bulk power purchase costs have increased around 300 per cent in the past 12 years, while consumer tariffs have increased only 70 per cent in the same period. DERC needs to provide cost reflective tariffs to cover this increase in power purchase costs, and recover past dues of Rs over 15,000 crore from consumers," Reliance Infra said.

"Delhi government can resolve the immediate payment crisis by providing support to Delhi Discoms to make payment to NTPC, against the security of these huge past under-recoveries, that have led to creation of Regulatory Assets of over Rs 15,000 crore," it said.

New Indian Express report (for the full text, click here):
BSES discoms, which supply power in nearly 70 per cent areas in the city, had informed that they did not have money to buy power and the city may reel under long outages if funds are not provided to them.

Critical of Delhi government, the discoms said it refused for the past 60 days to appoint its nominees to the committee directed to be formed by DERC to examine the precarious cash flow situation and take remedial measures.

"Delhi government's proposed step is a huge setback to power sector reforms, with grave repercussions for the country's future economic growth. DERC's failure to provide appropriate tariffs to cover increase in power purchase costs has led to under-recoveries of over Rs 15,000 crores from consumers," the discoms said.

The BSES discoms said the current payment crisis was result of DERC refusing to allow recovery of their past arrears.

New Indian Express editorial (for full text, click here)
Official data is self evident to justify the argument that there is little scope for lowering electricity tariff in Delhi to that extent, without a large dose of subsidy.

In the past 10 years, that is since 2002-03, the cost of power purchased by at least one of the distribution companies in the capital has increased by as much as 300 percent. To be specific, it has shot up from Rs.1.42 per unit to Rs.5.71 per unit today.

To be fair to the distribution companies, the regulatory authority approved this tariff as well after due scrutiny.

But what was the tariff hike that the consumers were subject to during this period? The answer is just 65 percent. That is, from Rs.3.96 per unit to Rs.6.55 per unit. This is lower than the 120-percent increase one has seen in the official consumer price index.


What is more, the bulk of the increase was effected in the past two years with virtually no upward hike during the five years preceding it. It is also an established fact that the city's distribution companies still have a burden of Rs.20,000 crore in un-recovered costs by having to sell electricity at below cost in the past.

One has to give credit to the distribution companies that they have managed to stay afloat despite being subject to scrutiny and pressures from the state government and the sector's watchdog. It is also credit-worthy that they have also initiated some quiet reforms in the system without much of a hue and cry.

One is referring to the effort that has gone into plugging the leakage which, for long, power distribution utilities were referring to as technical and commercial loss, even as everyone knew it was a euphemism for theft-some of it by the so-called "connected" people who could not be touched.


One of the distribution companies, BSES, says they managed to plug this loss by an impressive 40 percentage points-from 57 percent at one point of time to around 17 percent now.

Therefore, rather than burden the state's exchequer, distribution companies have actually made it richer, if one considers the opportunity cost-as the state would have otherwise had to compensate them for the loss in the form of subsidy.

One is not sure how the previous regulator in 2010 claimed that there was scope to reduce the power tariff by around 23 percent. Even then, the AAP has resorted to a very simplistic calculation while claiming there is scope to cut tariff by 50 percent.


Just on the basis of a hypothesis, it feels that if the tariff was not hiked in 2010 and subsequent increase were to be rolled back, the power tariff in Delhi would have been 50 percent less. This argument is poorly founded for the simple reason: Why has the hike resorted to by the generating companies not been taken into account?

Residents of Delhi today are much better off than they were some 10 years ago in terms of getting assured power without periodic cuts, especially in summers. It is equally noteworthy, especially in an energy-starved country like India, that much of this has been achieved by plugging loopholes than drawing more proportionate power from the grid.

If the new government in Delhi feels the residents are being much burdened by high power tariff, it is best if its representatives and those of the distribution companies sit down together to find solutions than posturing or adopting confrontationist approaches. This is the only practical way forward if the intention is the interests of consumers and not indulging in cheap politics.

I find it difficult to believe that Arvind Kejriwal, an IIT graduate, can't comprehend this sound reasoning. The conclusion is that he is playing politics. He's not going far this way.

 

 

Muralidhar Rao
Promod Kapur's picture

Sound Reasoning

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It is very apparent that AAP had made promises as a tool to remain in public gaze before entering electoral battle in Delhi. They had made a categorical assertion that they will have the power tarrifs reduced by a certain percentage (huge) as they claimed they had done a study. I am not sure of the study they claimed to have done, but their asserion was also on the basis of some letter written by a cetrain concerned official to the Delhi Administration that tarrif could be reduced.  It now seems that either their assertion weas a mere antic and they have to follow this though to retain their credibility or they played a dangerous game in the hope that they had in any case no chance of being placed in the drivers seat after the election and would still have something to shout about while sitting in the opposition. They look silly now and if the CAG gives a different account of the companies vis a vis what AK had claimed, AAP will look sillier. That thery want CAG to audit the accounts of distribution companies itself shows they had not done their homework well before making the promises. A serious administrator would first have got the books audited through independent agency and then pronounced judgement. But these are very early days for AAP, and it is hoped they will not make more mess of administration and governance. They appear to be running faster than their capacity and could lead to disastrous consequences. What effect it will have on the millions of people who had thrown their weight behind them is a million dollar question. Cheap popular slogans and posturing is never a substitute for good governance, nor of a visionary set to change the course of polity in the country.

murali772's picture

Transmission - the problem area now

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Delhi has been suffering outages after the May 30 storm damaged all the three feeder lines that wheel power to the Capital. The lines have been operating partially as repair work is on in full-swing.

Gujarat, Madhya Pradesh and Chhattisgarh— all BJP-ruled states— had offered additional power to Delhi as demand spiked to about 5,800 mw due to soaring temperature. But the transmission company was unable to draw this power due to capacity constraints of the feeder lines.


For the full reoport in the ToI, click here

On their part, the power companies claimed to have been working on a war footing to restore supply. "There was major loss of supply from extra high voltage northern region lines feeding power to Delhi on Friday due to the thunderstorm. A number of 400kV, 220 kV, 66kV, 33kV and 11kV high tension lines also tripped. Delhi was drawing around 5,150 MW and load fell by around 4,000 MW within an hour," said a senior Transco official.

For that report, of 1st June, in ToI, click here

Through these times too, the TATA (TPDDL) company performed relatively better, as the following report excerpts indicate:

Areas under Tata Power Delhi, especially north Delhi, experienced power cuts for a couple of hours on Saturday night (9th June - full report in ToI, here).

Power department officials said no loadshedding was reported in areas where power is supplied by Tata Power Delhi Distribution Ltd (11th June - full report in ToI, here).

So, even as the privatised distribution network has largely become capable of handling emergency situations, the transmission network management handled by the government is found wanting in capacity. But, that's a relatively simpler matter, that can be tackled fairly easily by the government-owned Gridcos, and as such, wouldn't necessarily warrant their privatisation.

But, the need for privatisation of distribution has become even more imperative.
 

Muralidhar Rao
murali772's picture

Katiabaazi

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If you want to get a feel of what the power supply scenario in Delhi was before it was privatised, do go see "Katiabaaz". The movie is all about the current scenario in Kanpur, presided over by the government-owned KESCO.
 
Actually, the scenario in Bangalore is only marginally better, and this is largely because our citizens are comparatively richer (thanks largely to the flourishing IT industry, and the trickle/ flow-down effect thereof), and can readily afford the alternatives like gensets, inverters, converters, batteries, etc etc (indeed, this too contributes to the trickle-down effect). But, there is a large section here too who cannot afford them, and as far as they are concerned, they may as well be living in Kanpur. 
 
Interestingly, there is a different type of "Katiyabaazi" carrying on in Lutyen's Delhi (where the neta's stay) even today, where the power supply has been deliberately retained under the government-owned DESU (which, like KESCO, was the supplier throughout Delhi, earlier). As different from the practice in Kanpur, of hooking wires onto the power lines, in Lutyen's Delhi, it happens through 'payable when able' (or even non-payment) policy, without fear of disconnection. Comparison of actual revenue generation figures for similar sized areas, one supplied by say Tata PPDL, and the other by DESU, should be quite revealing in this aspect.
 
The answer plainly is privatisation. Yes, the regulatory authority in Delhi needs to do better. The way to achieve that could perhaps be through providing for adequate representation there for domain experts from amongst reputed Civil Society organisations. 
 
But, unfortunately, the country (including large sections of the techie population of Bangalore, who owe their high-flying lifestyles to the liberalisation of the economy) seems to remain in the grip of pseudo-socialism, even as the city's poorer sections are paying dearly for it all. 
 
And, for all of AAP's pronouncements supporting private enterprise (check this), had not the ministry fallen fast enough, Delhi would very likely have reverted to the earlier times, with the CM himself playing the role of the chief Katiyabaaz (check my post of 8th Oct, 2012, scrolling above).
 
Muralidhar Rao
murali772's picture

The undoing of a good model

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The AAP - LG stand off originated over the issuance of "letters of comfort" to the Reliance discoms' banks, by the government (it is a 49% shareholder in both), against the huge monies owed by them to the discoms.

Now, AK's election strategy was to paint the big business houses as the villains, who totally controlled the government. The aam aadmi mindset, fed on decades of Nehruvian Socialism, readily gulped it all down too, with the the past shenanigans of business houses like Reliance helping to add to that sentiment.

AK & Co have more specifically been alleging wrong doings by the Reliance discoms (not a word has been said against the Tata company, and not a word in favour, either), which they promised to expose through a CAG audit, immediately on gaining power. Now, after 100 days in power, a "report card" released by them lists "performance audit of power discoms by CAG" as "partially implemented". Apparently, there's not enough there to nail Reliance, since otherwise one would have expected them to be tom-tomming it all over town.

If that's indeed the case, then they owe the Reliance discoms all of the Rs 20,000 cr odd accumulated under the "regulatory assets" head (which is essentially postponed payments and interest thereon), non-clearance of which has been badly crippling the discoms' operations. In such a scenario, making allegations against a senior official, who recommended issuance of the "letter of comfort", of being a stooge of Reliance, is nothing short of blasphemy.

Besides, what is called for immediately is to raise the tariff levels (perhaps more so at the higher consumption levels, where the resistance may no be too high considering the better quality of supplies, leading to lower dependence on far costlier genset and such alternate arrangements) in order to wipe out the huge backlog. However, this goes against AK's talk of reducing tariffs, and thereby the dilemma, and, to cover it all up, the drama.

Their approaches, to some basic issues involved too, are rather quixotic, one needs to add. They are, for instance, talking of setting up a captive thermal power plant in Delhi, even as Delhi is rated as amongst the most polluted cities in the world. Besides, a white paper published in their own web-site (accessible here), had clearly identified the route to containing power costs as to source bulk power from UMPP (ultra mega power projects)'s in the private sector, than from NTPC. Of course, this will call for timely payment arrangements, which perhaps they don't quite believe in, and hence the rejection of that option.

The approaches to other issues too, as seen from their "report card", are indicative of a staidness which will not quite help given the enormity of the challenges faced. As such, while there is indeed some merit in the argument for more powers for the elected government, one can't help but go by the charge that AK & Co are more on the lookout to cover up their incapacity to live up to the tall promises made to the electorate.

So, while admittedy, it may be too early to judge them on issues other than power, in the case of power, it may be a case of an undoing of a good model.

Muralidhar Rao
murali772's picture

CAG doesn't understand business

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The three private power distribution companies (discoms) in the capital inflated their dues to be recovered from consumers by almost Rs 8,000 crore, the comptroller and auditor general has said in its report on the discoms and claimed that there is scope for reducing tariffs in the city.

The 212-page confidential report, accessed by TOI, has indicted the three power distribution companies — BSES Yamuna Power Ltd (BYPL) and BSES Rajdhani Power Ltd (BRPL) controlled by Anil Ambani's Reliance group, and Tata Power Delhi Distribution Ltd (TPDDL) — on several counts.


For the full text of the report in the ToI, click here

For all of these charges, is anyone disputing the overall claims made by TPDDL (check the opening post in this blog), as also the Reliance companies if not to the same extent? The performance parameter levels achieved are close to world class, and at tariff levels comparable to, if not better than, those levied by other DISCOMS across the country, particularly the ones run by the government.

To understand the CAG's observations in lay-man's terms, let us take the case of a restaurant, serving some 500 meals a day. It will very likely have a fixed price contract with a trusted vendor for its projected monthly requirement of 2000 kg of a given quality of rice, for delivery at 500 kg per week. Now, supposing the market price for the same rice drops by some 20% during the period, should the restaurant dump its trusted vendor, buy from the market instead, and give the equivalent benefit to its customers? Not having done so, is more or less what the CAG is holding the DISCOMS guilty of.

Likewise, if during the period, for some reason, the number of meals sold drops to 400 a day, and the restaurant chooses to dispose of the excess stock of rice (rather than allow it to rot, or be consumed by rodents) at purchase price less 15%, and accounts it as a business loss, can the shareholders claim that the same level of dividend should be maintained, by making good the loss from the manager's salary? Well, that again is more or less what the CAG is saying.

And, quite similar are the other charges too. So, now I can understand why the PPP company managements are reluctant to accept CAG audit. No business can carry on if it has to go by CAG audit norms. And, since CAG audit is a must for government set-ups, answerable to parliament as they need to be, it becomes a good enough reason why they need to keep out of business.

Now, the Delhi power supply PPP Discoms have a 51:49 :: private:government share-holding pattern, allowing for a rate of return on equity of 15%, which is as good an arrangement as you can have for a utility as one can think of, with sufficient checks and balances in place, and with oversight by the DERC in addition. There could perhaps be scope for a nominee from the Civil Society in the DERC, if it doesn't already exist.

The city and citizens, incuding the aamest of the aam aadmi, have benefited immensely from it too, to the extent it is seen as a model for other cities in the country to emulate even. In such a scenario, if the Delhi government is going to go on finding fault with the Discoms and deriding them, with the plain objective of gaining brownie points with its vote banks, I wouldn't be surprised if TATA's even opt to pull out of the deal. It'll be interesting to see if the Delhi government can come up with a satisfactory alternative.

Muralidhar Rao
murali772's picture

Can AAP govt claim credit for lowering of tariffs by Discoms?

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Following are the excerpts (in italics) from a blog in the ToI, by Mr Pyaralal Raghavan, a Senior Asst Editor, with the ToI (full text may be accessed here1), and an obvious AAP sympathiser (rather, admirer), and my response, para-wise:

Delhi chief minister Arvind Kejriwal seems to have finally managed to shut up his critics and earn new laurels by pushing the Delhi Electricity Regulatory Commission (DERC) to desist from its regular annual hikes in electricity rates for the first time in many years. His continuous efforts to focus on more efficient management of the distribution network and reduce leakages seems to be finally paying off.

Delhi's privatised discoms had already achieved efficiency levels, even comparable to the best in the world (reliability levels of 99.9% - for the rest, check the opening post), long before Arvind Kejriwal came into the picture. If at all any body is to be credited for this, it should be the Sheila Dikshit government, who took bold to go ahead with the privatisation idea, even in the face of every kind of obstacles put up by the well entrenched mafia, as well as the pseudo-Socialists.

- - - But what is best about the new tariff orders is that Delhi power consumers can now even expect a further lowering of the electricity prices. This is because the new numbers show that the outstanding owned to the distribution companies, called regulatory assets in technical parlance, has suddenly dropped sharply by Rs 2000 crore this year prompted perhaps by the closer scrutiny of accounts by the stakeholders including the government which has successfully persuaded the CAG to audit all distribution companies for the first time since their inception.

The cause for the high tariffs (however, still lower than that charged by most government-run DISCOMs in other states), inspite of the improved performance efficiency, was well known as arising from the high power purchase cost (PPC), which constitutes over 80% of the DISCOMs' input costs, over which the DISCOMs had very little control. This had been commented, upon as below, in none other than AAP's "white paper" itself on 'bijli' (accessible here). "The latest power tariff orders passed by DERC throw up very important issues. The rates at which power generators are selling power to Delhi discoms varies between Rs1.2 per unit to Rs 12.21 per unit. Consider this, the newly commissioned Reliance owned Sasan UMPP bagged coal blocks by bidding to supply power at Rs 1.196/ unit. On the other hand Central PSU National Thermal Power Corporation, which have coal linkages with Coal India and which supplies about 75 percent of Delhi’s total power consumption, sells power at rates between as low as Rs 1.75 per unit to as high as Rs 6.15 per unit. Similarly, NHPC plants supplies power at per unit rates varying dramatically between Rs 1.77 to Rs 12.21. The issue is why Delhi does not have access to cheaper power and why it is being forced to buy expensive power!?".

Now, with the Central government facilitating the setting up of UMPP's by the likes of Reliance, as also opening up of the coal sector to private players, the earlier monopoly position of PSU's like NTPC, NHPC, and Coal India, has got eroded, leading to the DISCOMs' input prices becoming competitive, and paving the way for the lowering of tariffs, and simultaneous reduction of the regulatory asset account balance. This is quite in line with my comment "Eventually, that will help bring down the PPC for the DISCOMs, and the regulator can then re-structure the tariff to wipe out the regulatory asset burden in phases, following which the people of Delhi can enjoy the cheapest and highest quality (which is already the case) power, forever", made on 31st Jan, this year, accessible through the link provided in the above para.

Another major factor responsible for the turnaround is the ushering in of financial discipline amongst the stake-holders involved (more particularly the government), resulting out of the reversal of an earlier order by the Supreme Court, after the private players came into the picture (check here), leading to smoother and timely cash flow between them. In contrast, the government-owned BESCOM (Bengaluru) and its sister ESCOMS put together are paying their main supplier, viz government-owned KPCL, in 402 days on an average (ie almost 13 and a half months later - 09-10 figures; they aren't any better even now).

Apart from steady elimination of the regulatory assets the power prices to Delhi consumers will also be driven down by the firm stand taken by the DERC on the reduction in AT&C losses.

It didn't require any firm stand to be taken by DERC in the matter. It was in the interest of the DISCOMs themselves to do it, and they did it, with the support of the Sheila Dikshit government, and inspite of Arvind Kejriwal himself trying to sabotage their efforts (check my post of 8th Oct,'12, scrolling above).

It is also hoped that the move by the DERC to have a physical verification of the assets of the distribution companies and the billing audit will also help contain the regulatory assets.

We'll have to see about that. From what's available so far on the CAG report (check my post of 18th Aug, 2015, scrolling above), there doesn't appear to be any comment in it on asset valuation.

However, the AAP government which question the veracity of the regulatory assets has demanded that instead of accumulating funds to wipe out the remaining balance the DERC should further reduce the electricity prices charged to the consumers. But the DERC, which explains the stability in the electricity tariff to the reduction in regulatory assets and carrying costs and the strict curbs on buying and selling of costly power by the distribution companies, seems to prefer a less radical stand.

That's what regulation is all about. Besides, there are government nominees on the DISCOMs boards too, with their holding 49% stake. And with AAP holding the reins, the comapanies' stand should reflect the government's thinking too.

Whatever be the real reason the Delhi power consumers can heave a sigh of relief. The new power sector reforms being rolled out by the Delhi government will hopefully usher in more competition in the distribution sector will perhaps allow the Delhi government to add to the recent gains.

Very true; but, credit is largely to Sheila Dikshit government, and the Central government that has ended the monopoly of NTPC/ NHPC, Coal India, etc. AAP can perhaps be credited with publishing a fairly objective white paper.

But one person who can claim the real credit for this turnaround is the Delhi chief minister Arvind Kejriwal who made the high electricity prices a major plank of his election campaign.

Pyaralal's 'pyaar' for his 'neta' has apparenty clouded his objectivity, is all I would like to add.

One can only hope that other states where power distribution companies continue to make huge losses learn a few lessons from the Delhi experience.

All of the above only go to reinforce the case for immediate privatisation of power distribution, particularly in cities, as was the theme of this blog, even to begin with. And, if a Karnataka chooses to follow suit, the numerable learnings from the Delhi example (some listed here too) can help smoothen the process, and make it happen far faster. What's required is political will; but that'll not happen unless there's push from the people. And, that's what this petition is all about - do endorse, if you agree!

As for AAP, for all of the benefits Delhi has gained from privatisation of power distribution, it would appear, they would still not want to have much to do with professional players in the field of taxi services, bus transport services, water supply, healthcare, school and college education, etc. Perhaps, they would even want to go back to DESU for power distribution, given half a chance. The why's of it are still a bit of a mystery, and also one wonders how far such an approach can take them.

Muralidhar Rao
murali772's picture

time AAP govt changed approach

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Dealing an unexpected blow to the Arvind Kejriwal government, the Delhi high court on Friday struck down its decision to get the accounts of power discoms audited by the Comptroller & Auditor General of India. It pointed out that there was a regulator, Delhi Electricity Regulatory Commission, for auditing the accounts of private discoms for tariff determination and CAG could not usurp that role.

A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw observed that the purpose of the CAG audit - to examine if power tariffs were properly determined - was the exclusive domain of DERC.

"Thus, the purpose of the audit was/is not if privatization has served any purpose or whether the terms of the transfer scheme were in the interest of the Delhi government. The sole purpose/purport of the audit is tariff determination," the bench observed, faulting the process.

The pre-poll promise that resulted in a formal request to CAG to carry out an audit of discoms in January 2014 was described as a "populist measure" by the court which questioned the public interest behind the exercise. Since the state government and Delhi assembly have no power to take action on the CAG findings, the court said it "ultimately may serve no purpose".

- - - - Soon after the verdict, Delhi government said it will challenge it before the Supreme Court.


For the full text of the report in the ToI, click here.

Given the fact that the Discoms are PPP's with 49% government stake (meaning they have sufficient representation on the Company boards), and also the fact that there is the specialised agency, viz the DERC, to look into the tariff fixation (as well as other matters), one should think there are sufficient checks and balances in place already, and a CAG audit in addition is a superfluous exercise and a waste of time and resources.

Having said that, however, there has, from long, been this question mark of the process of selection of the ERC chairman. The post has invariably been filled up by the retired Principal Secretary (Power), from within the state itself, which then raises questions on conflict of interest, as has been brought out clearly in this post. This certainly warrants immediate correction, if the institution of ERC has to gain credibility with the people.

Now, with or without the tariff reductions that the leaked CAG audit findings supposedly warranted (check my post of 18th Aug, scrolling above), the Delhi government should appreciate that they already have a good thing going, resulting out of the privatisation exercise undertaken by the Shiela Dikshit government, compared to most other cities in the country 'served' by government-run utilities. As such, rather than continuing a confrontationist attitude, which perhaps helped them win the elections, they would now do well to build on the partnerships, and make them proper models for oher cities to follow, too. And, this need not be limited to power supply alone. They could extend to other areas, like water supply, public bus transport services, etc, too, with the necessary tweakings to address the peculiarities pertaining to each of these areas. Achieving all of that would be the kind of fulfilment of the promises one had of Arvind Kejriwal.

Muralidhar Rao
murali772's picture

the story behind the recent Delhi power outages

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State-owned NTPC Ltd’s threat earlier this month to cut off power supply to two units of Reliance Infrastructure Ltd supplying to large parts of Delhi due to delay in payments point to the financial distress slowly gripping private power distribution companies in the capital, which are now pinning hopes on central and state governments coming to their aid.

Reliance Infrastructure arms BSES Yamuna Power Ltd (BSEL YPL) and BSES Rajdhani Power Ltd (BSES RPL) and Tata Power Delhi Distribution Ltd are together saddled with more than Rs.36,000 crore of power purchase cost yet to be recovered from consumers due to delay in power tariff revision.

The companies now want not just government intervention in a debt rejig, but concerted efforts to reduce their power purchase cost, including replacement of costly long-term power purchase agreements that were signed by their predecessor Delhi Vidyut Board (DVB) before its privatization in 2002 with new ones from efficient and cost-effective power plants.


Companies believe that joining the Ujwal Discom Assurance Yojana (UDAY) approved by the Union cabinet on 5 November 2015, which was originally meant for state-owned power distributors, will help the private sector too to tide over their financial distress and could even lower power tariff by 75 paise per kilo watt hour.

“At the end of the day, the benefit of financial and operational efficiency achieved from UDAY will go to consumers, whether power is supplied by a government entity or a private one. Consumers in Delhi should not be deprived of its benefit,” said Praveer Sinha, chief executive officer (CEO) and managing director of Tata Power Delhi Distribution.

- - - At present, every unit of power supplied adds to distributors’ debt burden because the regulated power tariff charged to the consumer does not reflect the actual cost of power purchase, according to people familiar with the companies’ discussion with the governments.

State electricity regulatory commissions have to strike a delicate balance between avoiding tariff shocks to consumers and preventing unallowed costs (called regulatory assets) building up on the books of power distributors, which reduce their ability to give quality service. An email sent to the Delhi Electricity Regulatory Commission (DERC) on Monday remained unanswered. Cash flow problems affecting distribution companies’ ability to buy power and to invest in infrastructure maintenance leads to supply disruptions.


Delhi power minister Satyendra Jain on Saturday alleged that power cuts in the state are due to poor maintenance, adding that consumers should be compensated for outages of more than two hours. The state has approached DERC in this regard, he said.

Private power distributors fare way better than state-owned ones in operational efficiency. Sinha of Tata Power Delhi Distribution said the company has lowered its AT&C losses to less than 9% of the total units of electricity supplied from about 53% at the start of operations.


For the full text of a highly readable report (emphasis added by me) in LiveMint, click here.

So, now the reasons for the power outages in Delhi become clear. And, what's Satyendra Jain talking about consumers having to be compensated for outages, by the discoms, when he can't bother to clear the huge dues to them? At least now, he would do well to avail the UDAY scheme benefits and ensure a proper deal to the discoms, so that they can upgrade their infrastructure, and in turn offer an even better deal (it's already far better than what's on offer from govt discoms) to the consumers.

It may also be of interest to note that, unlike the government-owned BESCOM (as well as other Karnataka discoms), which can pass on its financial burden to KPCL (the government-owned generation company), paying it on an average in 13.5 months (check here), the courts reversed their own earlier ruling denying the Delhi discoms the "privilege", once the private players came into the picture (check here). So, that option is closed now.

Muralidhar Rao
murali772's picture

one way "TalktoAK" ?

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I had tweeted the following querry to Arvind Kejriwal, in response to his "TalkToAK" programme - "#TalkToAK - News reports indicate that regulatory assets worth close to Rs 36,000 cr have not been cleared by the government to the three DISCOMS. This is in turn leading to their inability to upgrade infrastructure, and consequent power outages - your comment, please!", in two parts, since it is more than 140 characters.

I didn't receive a response, whatsoever - not sure what to make of it.

Muralidhar Rao
murali772's picture

exemplary punishment for power theft

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Terming power theft to be a major menace for distribution companies, BSES, one of the capital's discoms, on Monday said a special electricity court here has sentenced an offender to two years' jail and a Rs 1.48 crore fine.

"Convict Ranjit Singh Chaudhary is sentenced to undergo rigorous imprisonment for two years and to pay fine of Rs 1,48,61,194, and in default of payment of fine to undergo simple imprisonment for 6 months," BSES said in a release here.

- - - "Efforts of discom enforcement teams to check the irregularities are thwarted by organised gangs on many occasions. Whenever enforcement teams reach these areas, these gangs 'gherao' (surround) them and don't let them check their premises," it said.

"Though Delhi discoms have managed to reduce AT & C (accumulated technical and commercial) losses from over 55 per cent to under 15 per cent in the last 14 years, there are still areas in Najafgargh, Jaffarpur, Mundka, Nangloi, Daryaganj, Chandini Chowk, Paharganj, Seelampur, Nand Nagari, Yamuna Vihar, and Karawal Nagar, Shaheen Bagh where power theft continues to be a concern," it added.


Earlier this year too, special courts in three separate judgements had sentenced to rigorous imprisonment Delhi residents for power theft and imposed heavy fines.

For the full text of the report in YahooNews, click here.

Not heard of any such pursuit by our BESCOM or any of the other state ESCOMS - can't be that such thefts are not happening here. As compared to gangs in Delhi, here it would perhaps be just a phone call from the MLA's chaela that'll keep the inspector at bay. And, of course, there's the other factor of the farm loads not being metered at all, which conveniently helps mask all losses under that head.

Very plainly government operations are just not geared for proper accountability, and thereby the need to divest them of the job.

Muralidhar Rao

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