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Power distribution to be privatised

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Governance

Taking a cue from its counterparts in Delhi and Mumbai, the state government is toying with the idea of handing over distribution of
power to private parties on a franchise basis. Currently, electricity supply companies (escoms like Bescom in Bangalore) do it.

"We are studying the Delhi and Mumbai models where private parties have been given franchises to distribute power. We propose to adopt such a model as part of power sector reforms,'' a senior energy department official said.

The move is seen as a bid to ensure better power supply at the consumer end and better revenue realization. "Once it's implemented, consumers will get uninterrupted power and it'll also lead to quicker repair of faults," the official claimed.

According to sources in the energy sector, the franchisee will purchase power from the state government (Karnataka Power Corporation) and sell it to consumers and will strengthen and maintain the distribution network. This system will not only address consumers' grievances but will also cut down the massive power pilferage, pegged at 22-27%.

Meanwhile, sources in the energy department said over 24 private firms, including Tata, Reliance, Essar and Torrent, are interested in the proposal, and the department plans to hold a meeting with their representatives shortly.

In Delhi, Reliance and Tata, after the initial hiccups, have been successfully handling power distribution on the franchise basis.

Initially, pilot projects could be launched in Bangalore. If successful, it will be implemented in other major urban and rural areas as well.

Allaying fears of power employees, a senior energy official said though the government proposed to rope in private firms, the concerned Escoms would have management control, with its employees involved in distribution. However, the government will allow corporates to employ their managerial teams to supervise the operation.

Besides, prospective private players with their professional approach would help reduce transmission & distribution losses. On the possibility of high tariff, the official said that under the proposal, private firms and the Escoms would share incremental revenue, and power rates would be fixed by the KERC.

The move has already enraged KPC employees. "Once the private company is given the contract, its only concern would be to maximumize profits and in the process, only those areas will get power where there are industries, as they would get higher revenue there," said a spokesperson of the KPTC employees association.

For the full text, click on:  http://timesofindia.indiatimes.com/Cities/Bangalore/Pvt-cos-could-handle-power-distribution/articleshow/4557596.cms

I have been advocating this from ages - check     here     . And, it was inevitable that with a proactive bureaucrat like Mr Jairaj at the helm, this had to happen sooner than later. Even importing power from Chattisgarh, rather than importing coal from there and burning it here to generate power - check      this      ,are sensible ideas being pursued by him.   

Strangely, however, Mr K S Eshwarappa, the Energy Minister, has denied such plans, though experts from TERI, spokesperson of Mysore Grahakara Parishad, etc have welcomed it. I expect the Minister, in typical politician style, is just waiting to see the reactions before announcing it himself. Whatever, credit is due to him for backing Mr Jairaj.

Muralidhar Rao

Comments

Vasanthkumar Mysoremath's picture

What foxes...R our Engineers so incompetent?

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If everything has to be outsourced / privatised to make the system work, will it not demoralise the learned highly paid officers and employees of ESCOMs?  

With all these decades of working have they not understood the loopholes in their working system?

What attempts have they made to plug such holes and systemic failures?

There was a time when Karnataka was having the highest rate of 35 per cent transmission loss.  Now it has come down drastically. 

How did they do it? Could not they adopt such R & D and O&M parameters in other spheres of ESCOMs for improving the power supply scenario in the State instead of buying power at exhorbitant rates?

Outsourcing does not come cheap - will it result in better supply performance and help reduce power consumption to stem the rot in ESCOMs? 

- Is somebody listening?

-Vasanth Mysoremath

California eletricity crisis is a reminder

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 Improper deregulation is as disastrous as high regulation as well. Thankfully, the telecoms story in India is a poster boy of success when optimally deregulated.

Improper deregulation was what caused the California Electricity Crisis.

http://en.wikipedia.org/wiki/California_electricity_crisis

Unfortunately in India, retail prices of power are capped while wholesale prices are not leading to a situation similar to that of California.

Recently, BESCOM wanted to raise tarrifs by Rs. 1.10/- - but this was shot down by the Power Minister K S Eshwarappa. 

Lets face it. Years of free TVs, subsidised rice, subsidised fuel are haunting us now. If we do not pay the power producers and adequately account for return on their equity invested in the respective projects, no one is going to invest in power generation.

Karnataka Thermal plants were blacklisted by coal suppliers because of the former's failures to pay coal suppliers on time.

In our nation, monopoly laws and competition laws are not stringent. Power distribution and tranmission companies in their quest to maximise profits will purchase power from where they find it profitable and will sell it to those they deem profitable.

This sometimes severly restricts producers of renewable energy since Escoms will only end up purchasing and hence providign incentives to gas and coal based producers.

Energy is a topic that is directly related to the environment and hence, unlike telecom the govt cannot abdicate it's responsibility in this crucial sector. Such costs to the environment do not appear in balance sheets or profit and loss statements.

At the same time, higher power tarrifs encourage energy intensity. When energy intensity and energy effeciency are encouraged, it is a very good situation for the environment.

The only way i see out from this mess is giving more autonomy to Escoms and promoting energy effeciency at the same time.

murali772's picture

Vasanth avare' Tata's and

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Vasanth avare'

Tata's and Reliance will pay more by way of salaries than the 'highly-paid' officers of BESCOM are presently getting. So, the sincere and honest employees would not be worried at all; on the contrary, they would be welcoming this move. So, there's no question arising of any demoralisation.

That said, however, the package they get will still be far lesser than the salary plus 'other'incomes that many of the employees are presently getting. It is these sections that are protesting.

The T&D (better defined as 'theft & dacoity') losses in Mumbai, Ahmedabad, Surat, etc, where distribution has from long been with the private sector, is far lesser than the level to which BESCOM has supposedly brought it down to. And, the reason is not any special technology or skill that they employ; it's plain non-interference by neta's, which can never be guaranteed when it's run by a government agency.

The whole idea of outsourcing is to improve efficiency. And, improved efficiency reduces costs.

And, yes, finally somebody seems to be listening, and listening to well-reasoned suggestions.

Muralidhar Rao

Muralidhar Rao
murali772's picture

Cadambi avare' You have

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Cadambi avare'

You have stated "The only way i see out from this mess is giving more autonomy to Escoms and promoting energy effeciency at the same time."

The state has a bigger role as the facilitator and regulator, and when it becomes a player in addition, this bigger role gets compromised. Besides, the state can rarely be an efficient player. Further, if it's a monopoly situation (like with power distribution), it becomes the epicentre of all kinds of racketeering.

Your point about proper regulation is indeed true. In fact, the KERC today is acting more like a consumer forum than a regulator. However, private sector participation in distribution in the country is not something new, and unlike in the bus transport services sector, it is the organised sector players that are there in the picture. I expect between the lot, they will set right the anomalies soon, particularly given the improved political climate, and hopefully we will all be able to do away with our gensets, inverters, converters, candles, match-sticks, and what have you, in the not too distant future

Muralidhar Rao

Muralidhar Rao
srkulhalli's picture

Coupon system the answer ?

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Electricity is one of the problems that is easily solvable. Unlike transport, METRO or rail infrastructure, one can more easily have competition in generation, transmission and distribution and whats more, there is enough paying power in the country to recuperate investment. In that sense it is closer to the telecom sector, and can be made a success story. However, unlike telecom sector, dont expect prices to fall down, as this is a natural resources intensive sector and scale does not mean reduced costs.

The problem is that electricity is used as a means for social welfare (free electricity for farmers ?).  Not anything for or against socialism, but the way around would be to privatise the whole thing and give coupons to the deserving, say 100 units per months for eg: Something similar to the ration card. Either the govt. can then pay the companies directly or offset the coupon against taxes or something. This seems easily doable and will clean up the system a whole lot, reduce pilfreage, and at the end of the day, farmers will also be happy as they will get assured quality electricity. Looks doable ?

 

 

 

 

Suhas

Suhas

State support/invovlement required

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Unlike telecoms, we cannot expect power prices to reduce because power is still as Suhas said, linked to our natural resources.

The problem with just leaving distribution to private companies is that private companies would not want to incentivise renewable power, unlike the state.

Incentives are crucial and necessary to the renewable sector. Infact, they are quite sucessfull. The solar thermal water heaters we see in our homes these days is a success of incentives and subsidies.

When subsidies started to be applied towards this sector, the momentum of the sector picked up an installing solar water heaters has played a tremendous role in reducing peak power requirements.

With the above example in mind, we have to take caution before throwing the winds of power distribution to the hands of private players. Private distributors will not want to purchase renewable power and would prefer more polluting sources of power like coal and gas.

There will be conflict of interest between producers and monopolistic situation. For example, if Tata Power is allowed to take over BESCOM, it would make it a priority to purchase from power stations installed by it. Thereby denying wind and solar producers a market they deserve more.

Therefore with the above constraint in mind, i am NOT in favour of privatised distribution unless there is *SOME* state involvment.

Power loss and theft can be mitigated on the lines similar to the JUSCO water deal in Mysore. JUSCO's role was to provide information where water is supplied and if it is billed effecienty.

Poor cabling also leads to power theft. It is a low hanging fruit for BESCOM if the cabling of it's lines is upgraded. Simple solutions like this will lead to astounding results. 

srkulhalli's picture

Power privatisation is neccessary

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Poor cabling also leads to power theft. It is a low hanging fruit for BESCOM if the cabling of it's lines is upgraded. Simple solutions like this will lead to astounding results. 

Precisely why we need to get in private players, They have the incentive and the ability to clean these things up now and in the future as well

Incentives are crucial and necessary to the renewable sector. Infact, they are quite sucessfull. The solar thermal water heaters we see in our homes these days is a success of incentives and subsidies

Correct. But once it decided the incentives, govt let private players fight it out so that the best person won. They did not get in with their own solar water heater company.

I think I see your point that blind privatisation will not help and needs to be well supported with good long term policies. But like telecom, power can be a big enabler to our countries global competitiveness. Its ridiculous that we get all these power cuts when we are willing to pay for it. Expecting somehow govt companies will shape up on their own is a mirage. But once we get in good healthy competition, they may shape up like BSNL has done.

 

Suhas

Suhas

Conflict of interest

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My Tata Indigo car was recently damaged. Just because i had Tata AIG insurance, the process of claiming and processing insurance was speeded up.

If i had insurance from say Reliance General, then there would have been a possibility that Reliance would have rejected my claim.

It is just this kind of nepotism that is possible if BESCOM was sold to say TATA or Reliance. Tata will then just distribute power from it's power plants and will not want to pay for costly wind power.

This will just boost cheap coal.

Remember, costs to the environment are not reflected in balance sheets.

I'm skeptical about handing over power distribution to the private sector unless we have a special arrangement to promote renewable power. 

Vasanthkumar Mysoremath's picture

Natural resources are finite-Power should always be with State

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It will be utterly foolish to hand over even a part of power sector to private players at this juncture. 

I beg to agree partly with Murali's quote: /The state has a bigger role as the facilitator and regulator/(Yes), and when it becomes a player in addition, this bigger role gets compromised. (?) 

'Power' and power to handle 'Power' should not be allowed to be transferred to private lobbies but should be held closely to the chest by the State because if it is allowed to be privatised due to incompetency of a few people who are mis-handling the demand and supply systems, tomorrow private lobbies will exploit this invaluable social sector basic amenity and the State cannot be a mute spectator.  It will be difficult to fathom how the whole scenario changes if the existing

How many of us have identified the danger signals that are flashing in the horizon regarding availability of natural resources that are being over exploited in the name of development and for catering to the 'out of the box' materialistic comforts of our 'responsible citizens'/industrial development?  

Sample this:

At the present rate of drilling/exploitation of fossil fuels like Crude Oil, Coal/thermal and Hydro raw materials warning bells have been sounded.

Crude Oil may be available to all countries upto a maximum period of 25 years - after that it will be rationing -  by OPEC - cost may go upto $300 per barrel - in another 50 years, most of your flashy cars, bikes etc., will be lying on the streets because fuel would have become unaffordable to run the machines.

Coal: Warning bell - 150 years from now, 90 per cent of this thermal fuel would have been exploited and those will some reserves will not give it to others.  Right now, China has adopted a very clever strategy.  It is sitting on a medium grade coal reserve and has not been exploiting/excavating for its power generation requirement.  It is importing coal because cost of excavation is costlier than exploration and excavation on its land.  When the coal scenario becomes bleak, it will open its mines to reap the harvest albeit at a cost but worth it at that time.

Hydro: We are already fighting for a few pots of potable water and it is said that future wars will be faught on water issues.   KPTCL in one of its statements a few months ago has warned that Hydro Electric power generation may be a difficult proposition down the years.

People must understand these red signals. They are blissfully unaware and are misusing electricity during day time for lighting their homes/shops etc., even though bright sunshine/solar light will be available just outside their windows/ doors.  It is possible to save millions of units of scarce electricity just by bringing home the solar light. 

Have a look at:

 

/Suhas -   Its ridiculous that we get all these power cuts when we are willing to pay for it/ - Yes Sir, u r right - service always comes at a cost and 'haves' can afford it and the 'have nots' will be eternally constrained to live in perpetual darkness.  We should catch and teach our kids austerity in utilising electricity and they will be of much better ambassadors because the world belongs to them.

- Even in the case of JUSCO water supply deal at Mysore, the word 'privatisation' is a 'blow hot blow cold' word. A few days ago,  Minister for Urban Dev. has talked to media stating that JUSCO contract is only for laying pipes and ....?  There is so much of controversy in this Rs.195 crores budget JNNURM project.  Even the civil society is at loggerheads with each other - ACICM / MGP and many citizens keep airing their views in the Media.

- Vasanthkumar Mysoremath

srkulhalli's picture

Re:Natural resources are finite-Power should always be with Stat

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Vasanth avre,

In your view, what should NOT be held with the state ? Should we have allowed telecom to be privatised ? Banks ? Automobiles ?

Just curious

Suhas

Suhas

murali772's picture

Cadambi avare' Renewable

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Cadambi avare'

Renewable power is best suited to distributed generation and supply, rather than when it's fed into the grid. And, promotion of that will of course remain the state responsibility. I don't see where the problem lies.

And, your doubts about a non-TATA company handling insurance claim pertaining to a TATA Indigo professionally is not well-founded. That's not quite how these companies work.


Mysoremath avare'
Am I to understand you subscribe to        this        ?

Muralidhar Rao

Muralidhar Rao
Vasanthkumar Mysoremath's picture

Energy sector has to be regulated by State - for 'posterity'.

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Murali Sir, Yes I have an inclination to subscribe to 'this' referred to above. We are wedded to the socialistic pattern of society and let us be faithfull to the ethos of noble thoughts.

Kulhalli avare,  Pitamaha of Telecom Mr.Sam Pitroda in those good old days when Rajiv was PM had set rough guidelines for escalating the telecom sector to the grassroots level. Now telephones / mobiles have become ubiquitous that is the power of R & D. Subsequently telephone/mobile became a necessity rather than a luxury.  Regulatory mechanism like TRAI is working very well despite allowing a number of private players and every other day the consumers have become the beneficiaries of such regulatory mechanisms of reduced call charges, value added services etc., albeit by making sufficient profits. 

But Energy sector is a different cup of tea.  Look at the fluctuating rates in purchasing power from privates. Who will bear the burden? Can 'have nots' afford the rates charged by private operators if allowed to be supplied directly tomorrow?

- Vasanth Mysoremath

Renewable

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Muralidhar sir,

It is a fallacy that renewable energy is purely a small scale or a distributed one. Tamil Nadu is making good use of it's 4000 MW of wind power. That is equivalent to reducing tons of CO2.

Besides, wind in particular has a lower incremental cost compared to thermal and gas. Wind is not worried about fluctuation in commodity cycles. R&M costs of wind are also low, infact negligible if compared to thermal.

My only problem with private generation is that the private distributors will march towards a race to the bottom. Single handely they will encourage thermal and gas without using renewable energy.

Renewable energy (apart from small hydel) needs critical state support during it's nascent stages.

The burgeoing solar thermal water heater industry is an example when subsidies played a key role during their nascent stages. Now after many years of it, the Industry is slowly capable of making profits on a stand alone basis without subsidies. 

Unless the wind energy sector had the benefits of accelerated depreciation, we would not even have a few megawatts of wind.

India Inc

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Murali,

Don't tell me India Inc is not nepotic.  Apart from a handful of few firms, most indian firms are still closely held by their top promoters and are nepotic in nature.

And it does not help that we have a malfunctional judiciary and absence of implementation of competition laws. 

murali772's picture

insignificant

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Cadambi avare'

Even if there's some extent of nepotism (as you call it) between members of Corporate groups, in a competitive world, it is rarely of any significance.

Muralidhar Rao

Muralidhar Rao
murali772's picture

a win-win in every aspect

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The biggest problem the ESCOMs have been facing is funds shortage due to the perennial delay in the release of subsidies by the state government corresponding to the IPS (irrigation pump-sets) load. Now, with the franchising, the IPS loads will get separated and the question of cross-subsidising, and the various inefficiencies and thefts camouflaged in its name, will no longer arise. The subsidies whatever can be handed out directly to the IPS owners perhaps through the 'coupons system' that Suhas has talked about.

With the removal of the IPS loads, the franchisees will not be faced with any cash problems, and they in turn will not pose such problems to the IPPs (Independent Power Producers), whether they are dependent on conventional or renewable sources.

If the renewable energy producers have not been doing too well all this while, it is again largely on account of the payment delays by the ESCOMs. Now, with that problem sorted out, they can flourish as long as the investment subsidy, depreciation benefits, tax holidays, etc continue to be made available to them. And, anyway, these are all in the hands of the state and central governments.

In effect, the scope for increased investment in renewable enegrgy production provides a very strong case for privatisation of distribution, in addition to the other benefits like reduction of T&D (theft & dacoity) losses. And, with every unit saved being equivalent of every unit generated, the overall CO2 output will also get reduced - a win-win in every aspect.

Muralidhar Rao

Muralidhar Rao

Nepotism and conflict of interest

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Muralidhar sir,

Do you really think that even this "insignificant" nepotism will not lead to a situation similar to the California electricity crisis?

With such few players in the market, catelistation, implicit and explicit collusion will only become the norm.

Under such circumstances, there is ample scope of any private consortium to abusing the power distribution network. 

murali772's picture

Few players?

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Cadambi avare'

Few players? To quote the TOI report - "sources in the energy department said over 24 private firms, including Tata, Reliance, Essar and Torrent, are interested in the proposal". Is that enough numbers for you?

And, what has been our experience in Telecom, Civil Aviation, or any of the sectors that have been opened out? Besides, let's look at the experience of Indian cities like Mumbai, Kolkata, Ahmedabad, Surat, and lately New Delhi (google a reoport by PRAYAS of Pune, if you wish to know more), where distribution is already in the hands of privte players. What has happened in California I don't think is of immediate relevance here.

Muralidhar Rao

Muralidhar Rao
Vasanthkumar Mysoremath's picture

India is on the right track of Renewable Energy Sector..

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Murali & Cadambi Sirs,

Pl forget nepotism, malfunction of judiciary (what are these things?).  Let us be pragmatic and look at energy problems that will affect the whole generations to come.  Talk about achievables and adaptability of variables at proper levels, over a period of time.  Got the picture?  India is at it and  has its own broader perspective for implementation of programs etc., for making a mark at the global level. 

The following MoUs have been signed during the period 2007 – 2009 for integrating various types of renewable energy resources within the framework of a global network.   Future lies in Renewables and protection and preservation of available natural resources at grassroots level for 'posterity'.  Let us honor the holistic thoughts and reduce our versions of improving the world.  Certain developments have taken shape at an international level and here are some:

source: http://www.mnes.nic.in  

 
      The detailed MoUs in respect of the above cooperation programmes are available for perusal.
      - In addition, interaction with USA and Japan for cooperation in New and Renewable Energy is pursued under India-US Energy Dialogue and India-Japan Energy Dialogue, respectively.
      -  Interaction with EU for cooperation in New and Renewable Energy is pursued under India-EU Energy Panel.
      -  A multilateral cooperation framework called Asia-Pacific Partnership on Clean Development and Climate (APPCDC) enables interaction for cooperation with USA, China, South Korea, Japan, Canada and Australia.
 
      We have certain systemic failures staring at our face in managing our energy sector, absence of proper management of available power and resources, clean development management, demand and supply management and of course with a masala of malpractices at all levels.  Let us try to find variables to stem these rots and may be, may be, we would be able to achieve a semblance of respectability in our efficiency.
 
- Vasanth Mysoremath
 
 
 
 

California lessons

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Muralidhar sir,

Indian policy mandarins in the power sector are only too aware of the California electricity crisis. Gulzar Natarajan wrote about it and what it teaches for it.

http://www.livemint.com/2009/02/25223336/Electricity-market-disorders.html

Particularly, Mr Natarajan writes that "The electricity crisis in California at the turn of the century, characterized by high prices and rolling blackouts, a result of un-restrained deregulation, offers valuable lessons for policymaking in the electricity sector. As India embarks on an ambitious programme to restructure and reform the power sector in its quest to expand generation capacity and improve quality of supply, it is imperative that these lessons are borne in mind."

It is imperative that we do not blindly cut copy and paste Reagan era deregulation into India.

Thankfully, there is a middle way. Gujarat has embarked on a quest to seperate the Rural grid from the urban grid in order to manage both better.

 Secondly, if assuming Tata Power bags the privatisation of BESCOM, it will give preference to power generated by it and will benefit cheap thermal, gas without supply renewable power to domestic needs.

I am NOT in favour of privatisation in a wholesale manner. We need to understand the problems faced after deregulation even in America before we proceed ahead with deregulation in India.

srkulhalli's picture

More on power privatisation

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Mcadambi avare,

Sir, California is one example. But even there, the situation is far better than namma Bangalore, is it not  ??? Look at how much T & D losses are their today, isnt that a big big impact on the enviorement, on our economcy.

I totally agree with you that blind privatisation will not work. It has to be done in the right policy and regulatory freamework. Similarly, blindly putting faith on govt. sector will not work either. We need to seperate out each responsiblities clearly.

Govt. job is to bring the right regulations. Can they not tax coal heavily, subsidise renewable etc. There are a number of ways to ensure this does not spiral into envioremental disaster, as you may be rightly worried. Once they give the framework, the private parties will innovate, bring their efficiencies and as long as the govt. ensure they compete on the RIGHT parameters, the system then takes care of itself.

Sir, your example of private players crossing paths is really weak. By your arguments, even the telecom should not have been privatised. If I call from Airtel to Reliance, Reliance will not have motivation to give good quality, is that not ? Buisness leaders have neccessary intelligence to ensure that they do not sacrifice the long term for short term gains. Beyond that the regulatory framework will take care.

Vasanth avare,

Signing documents does not a nation make. Our govt. and specially socialists and communists are great at ideals, a little off-track in translating into reality. You need to get your feet on the ground a little bit and see what works for the common man, aam admi. He should not suffer because of your ideologies, however noble they may be.

I will give you an example and close with this. My freind Shriram is a brilliant engineer and budding enterprenuer. He is a commited enviorementalist, and wants to see solar and wind energy get utilised in a big way. He also wants to break the monopoly of big energy and get it to a point where it is indivdualised. His idea is to have solar and wind on each rooftop, but really these are not available all the time. Problem with storage is it is inefficient (30% loss in the full cycle), plus batteries need to be changed every few years, making it have a high running cost, enviorementally unfriendly (battery disposal). His idea is to have different such homes hookup and have a distributed decentralised link up. Intelligence is built in every home setup, giving priorities (for lighting for eg:) such that a certain minimum always exists, plus everybodys needs are taken care of over the day. Its a fantastic solution which is economically viable.

The problem this runs into is govt. regulations. You cannot just distribute like that. Only govt. can do the job, and bescom officials think he is crazy. Babus at the top have fixed these regulations, thinking they know what is the best, that technology is stagnant, human creativity and ambition does not count for much. Shriram may be tech savy, but he is not a lawyer, not  politically savy and cannot negotiate this labrynith of govt. So he does nothing and continues to work in a software job. Meanwhile our dear country continues to bleed, our enviorement continues to suffer.

Suhas

Suhas

s_yajaman's picture

Some thoughts

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In general distribution is better served by private companies.  Go to any village and even if you don't find water there you will find a Coke bottle or a pack of chips.  On the flip side essential services might not get the same distribution push if there is no profit to be made.   E.g. will a private bus serve a small village where only 3 or 4 people will board the bus?  Or will remote villages get connected by all weather roads if there is no money to be made?

Two ways of  looking at it.  One that the government is left with all unwanted consumers.  Or the other way is that the government minimizes its participation to the where it is most needed.  E.g. if say Reliance is willing to build a highway between Bangalore and Chennai and collect toll, then the government can save rs. 2000 crores or whatever and put it in village/district connectivity.  still never straight forward given our experience with NICE (road become secondary to real estate?).  How does the state ensure that it does not give away too much land, etc?  How does it ensure that toll rates are reasonable?   How do we value the assets being privatized?  Lots of grey areas to say that this is an unmixed blessing.

Suhas - I agree mostly with your post except the long term vision of business leaders.  Sadly they live from quarter to quarter.  Else the current economic/financial crisis would not have been  as bad as this.

Overarching issue is to ensure that our 24 hr power consumption does not come at the cost to the environment.  

Personal experience

I have lived in two cities in India where power distribution was privatized - Calcutta and Bombay. 

Calcutta - when I was there between 1994 and 1996 hardly had a single power cut.  Not sure if this was because of superior distribution or simple not enough demand. 

Bombay - was there from 1996 to 1999.  We had a total of 15 mins power cut in our apartment and that too bcause of some maintenance work in our area.  I was living in an area served by BEST and not BSES.   In 1996 we used to have 4-5 hour power cuts in Bangalore when the JH Patel govt was in power. 

For Bangalore I would be in favour of privatization of distribution.

Srivathsa

 

 

 

 

Drive safe.  It is not just the car maker which can recall its product.

Vasanthkumar Mysoremath's picture

Privatisation is not the anathema..Why not experiment a pilot?

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Suhas avare

Your friend Shriram is not alone - My take:

-   I have also suffered in the hands of these power holdersMy Project U-SEE (Unlimited Saving of Electrical Energy) that earned a certificate of honor at World Bank IDM 2007 competition (lone entry from Karnataka amongst 50 finalists out of 2650 recd).  Before I sent the proposal to World Bank, KREDL issued a letter to the World Bank that they support my project and would take it to the grassroots level for implementation.  

-   My project was a simple one (hithala gida maddalla) that did not need any nano technology nor billion dollar investment unlike other modes of renewables like wind, bio-mass, hydel but used simple household mirrors to deflect the solar light onto the ceiling of our homes to get bright light in the interirors and to switch off lights were being used during day time for lighting purpose.  Prajas can also implement this at their homes and get free light for nearly 200 days in a year.  My plan also catered to hi-end customers with PV Cells panels embeded tech design. 

-  But after I was honored in World Bank on 29 May 2007 - Then President of India Shri APJ Abdul Kalaam saw my demonstration of U-SEE and had a word of appreciation at WB Arena Knowledge Enclave, KREDL cold shouldered my efforts. 

-  Next stop - gave a series of Demos and delivered talks on U-SEE in more than 20 Climate Change workshops, conclaves, talks, etc., at Bengaluru and with the help of NSS volunteers of Colleges, gave demos at rural area villages, posted on Yahoo groups, NGO Post, TV Interviews, Live talks on various channels, wide media coverage. I have given this U-SEE idea to a number of schools and colleges during their science talent competitions and they have won encomiums.

-  I tapped the doors of BESCOM, gave a demo to some senior officials of Demand and Supply Department who had words of appreciation but did not bother to get back to me for a coherent planning and implementation.  No probs.

-  I do not intend lying low and will continue to do my bit to save electricity which I am doing for the last 10 years at my home and most of all my grand children are happy with this simple technique of bringing home the bright sunshine.

Many Prajas might have seen these connects but I continue to remind them so that some time they will adopt and be happy - Have a look:

There is nothing impossible and if there is an element of saving of valuable natural resources for protection and preservation, a pilot project / experimentation of a particular division of BESCOM may be tried with the option of privatisation for supply of power for proof, stats, regulatory mechanisms etc.

- Vasanth Mysoremath

murali772's picture

misplaced fears

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41 users have liked.

Cadambi avare'

There are lessons not just from California, but from many other parts of the world, including our own New Delhi and Orissa, where the transitions have been far from smooth. And, perhaps it's based on these that the distribution franchise models have been drawn up.

Again, what we are talking about is franchising of distribution. Transmission, which is the most key element in exercising regulation, is going to remain with government-owned KPTCL. So, I don't understand the relevance of the talks about 'unrestrained de-regulation', 'blindly following Reagan era', 'wholesale privatisation', etc here.

And, if TATAs are able procure thermal power cheaply (though, I can't see how), the government can make renewable energy even cheaper by increasing the incentives. Besides, there's the regulator to look into all these issues, and having been in place for over decades now, they have developed enough clout to handle these issues effectively.

Either way, TATAs are not much into generation as of now. They have some hydel plants in Maharashtra whose capacity is barely enough to meet their demand in Mumbai city. The biggest thermal power producers are KPCL in Karnataka, and NTPC the country over. Neither TATAs or Reliance will be able to catch up with them in the forseeable future. So, even from that angle, your fears are totally misplaced.

Well, I think I have exhausted whatever there's to be said on the subject. Beyond this, there's no meaning to going on arguing endlessly. I shall therefore choose to rest my case. It's for the readers to make their own judgments.

Muralidhar Rao

Muralidhar Rao
psaram42's picture

Is it a time for healthy competition

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52 users have liked.

 Take for example the Telecom sector. We were at the mercy of VSNL once upon a time. I waited for 10 years to get a telephone connection. We could sell our scooters like wespa and telephones at a premium, in those days. See the difference now. I am extremely happy about my Airtel  Land line. VSNL were very shy to give a parallel connection. Now I have three parallel lines for a single Airtel number. The call is transferred to my mobile if I do not pick up my land phone for two rings. I am not satiated enjoying my Airtel land line thinking of the VSNL days. We see now “Aircell” an Airtel sound alike! I was a happy person to surrender my VSNL line long back. They took a year to return my deposit money!

We have as a nation come far away from protectionism, communism and socialism. The time is for healthy competition. However, the time has to be ripe for the energy sector I suppose. Mumbai model is working well perhaps.

PSA

Privatisation in power distribution - a report card

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http://gulzar05.blogspot.com/2009/05/private-vs-government-sector.html

It appears that Privatisation in power distribution did not necessarily bring in drastic positive changes other than plucking initial low hanging fruits.

Given such a scenario, we have to concentrate on more root causes like freeze on retail tarrifs and no cap on wholesale tarrifs. Capacity addition by incentivising private sector and pursuing a more dilligent energy mix (including supercritical coal and gas), adequate renewables should address the situation in a over all context.

Privatisation of ESCOMs with EQUITY participation from the Government is needed. The Govt should have a majority stake in the ESCOM.

This way, the Govt can ensure the social utility and the private player can work on resource effeciency. Adequate support should be given to renewables in such a dispensation.

I've come to the middle ground after reading the views of Mr Gulzar Natarajan. While wholesale privatisation is not a panacea, partial privatisation may yield good results.

Nevertheless, autonomy for ESCOMs are needed. Instead of pandering to populist measures, ESCOMs should be allowed to effeciently allocate resources. 

srkulhalli's picture

Getting close, not bad

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Just to close, I think we are much closer to each other than we started, so not a bad discussion at all. All of us are finding middle ground, question is about extent of govt/privatisation, so still good.

Vasanth avare,

On a side note, I did glance through your scheme. But it looked to me as rather cumbersome, having to change the mirrors every so often (how often ?) in a day. Did that not tire you ?

If its a good idea, have you thought going commercial with it. That is the best way to scale. Since there is no electricity involved, you should not face any problems.

Suhas

Suhas

Vasanthkumar Mysoremath's picture

U-SEE - Different designs exist for different users...

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Suhas

Yes, U R right - it did in the beginning because I had to keep a close watch on aspects of latitude and longtitude of earth's rotations on its axis etc. But I was able to overcome the hurdle for the basic model by planning a simple method of fixing the mirror in a bucket in such a way that my effort would be minimal and benefit would be maximum - say once in two hours.  This means, I will have to move the bucket only 3/4 times in about 6 hours of usage, without getting tired, to deflect the sunshine onto the ceiling of my home.  

I have other models with ready made designs  

- basic model for rural huts,

- improved model for hi-rise homes, and

- hi-end model for day and night service - This model will cost a little because it houses a photovoltaic cell and a mirror stand on a stand with multi-movements. This model will also be useful with governmental intervention for rural homes with subsidy or loans at low interest to protect, preserve and save natural resources being over exploited.  This mobile model will cater to day time sunshine harvesting and in the evening, the stored electricity can serve a household for minimum of 4 hours after sunset. 

 You can see them on   

In one of the pictures, you will find me demonstrating the method of harvesting sunshine at one of the homes in rural areas near Bangalore International Airport with the help of NSS workers of MES College, Bangalore.  I generally carry some mirrors with my pension money, present them to the poorest of the poor.  They were surprised at the simple way of how to brighten their dark homes even during day time.
 
This World Bank honored project does not involve any nano technology or billion dollar investment.  I feel it is one of the answers for the global problem of shortage of electricity. 
 
- Where there is a will there is a way. 
 
- All of us are innovators
 
-Vasanth Mysoremath
 
 

 

murali772's picture

convincing evidence

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The most convincing evidence though, in favour of private distribution, is the outstanding performance of the private (and one municipal but formerly private) distribution licensees of Mumbai, Kolkata, Ahmedabad and Surat. Their robust business model has sustained over a century. They have met all the aspirations of their stakeholders and the level of losses are in line with global benchmarks. Further, two of these companies have taken up the challenge of improving the performance of Delhi’s three distribution entities and have achieved (and in the case of NDPL, bettered) the targeted loss reduction.

There is no more time to be lost. For starters, distribution in state capitals should be bid out to public-private partnerships (PPP) as in Delhi, followed by distribution in all cities with a population above one million. For the rest of the state, distribution must be broken up district-wise, division-wise or municipal corporation-wise and then bid out.

For the full text, click on:

http://www.business-standard.com/india/news/ccolaco-powered-by-privatisation/339192/

 

Muralidhar Rao

Muralidhar Rao

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