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Imperatives of privatisation of power distribution

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Power

The World Customers' Day was observed by BESCOM in its usual ritualistic style on Saturday, the 15th March by holding a workshop on 'Customer Care', in association with Public Affairs Centre (PAC), Swabhimana, Consumer Advocacy, and Karnataka Electricity Regulatory Commission (KERC). Of the audience of a 100 odd people, only some 30 were members of Civil Society groups (RWA's, etc), the rest comprising mostly of BESCOM officials. Seeing this, the chief guest, Dr Samuel Paul, Chairman, PAC, remarked that the poor turn out was perhaps an indication of the high level of satisfaction with BESCOM services.

I wish to submit here that such statements by people of the stature of Dr Paul tend to convey a totally wrong picture compared to the actual position obtaining on the ground. Granted that the services may have improved compared to what it was a few years ago. But, Bangalore today produces goods and provides services of the highest quality to its clientele right across the globe. For such a city, the interruption-ridden service of BESCOM is nowhere near good enough. And, it is not as if better level of service is not possible in the Indian context, or anything like that. Cities such as Mumbai, Ahmedabad, Surat, Kolkata, Greater Noida, enjoy far better quality of power supply. This is evidenced by the fact that, while Bangalore is currently a Rs 1500 cr market for gensets, inverters, converters, batteries, emergency lamps, candles, match-sticks, and what have you, these products have a marginal presence, if at all, in the cities listed. And, now, New Delhi is all set to join them. The reason for the same is also not too far to seek - while Bangalore is served by the government-owned BESCOM, all the other cities are served by companies in the private sector. Need one elaborate further?

The apologists would immediately go on to talk about BESCOM's social responsibility of having to cater to the needs of the rural sector. But, then is it doing any better than its counterparts in the other states in this aspect? The records do not show anything like that, either. In effect, whereas in Karnataka, the people in both the cities as well as in the rural areas have to suffer the incapacity of the government agency, people in cities like Mumbai get the benefit of quality power supplied by private sector companies even as their rural brethren may not be in such a privileged position. Perhaps that is the idea of social justice of Karnataka politicos! But, in today's competitive world, can a city afford this?

Ironically, however, in Karnataka itself, there has existed from long an excellent model for sustainable rural power distribution in the form of the Hukeri Co-op Society in Belgaum district. The Society buys power in bulk at high voltage from the Karnataka Power Transmission Corporation (KPTCL), arranges its distribution, collects money, and remits it to KPTCL on time, thus ensuring quality power supply from them, and, in the process, keeping everyone including the many farmer members totally happy. Where this model may not be feasible, particularly in geographically isolated communities, stand alone solar systems are a far more sensible option, than running kilometers of transmission lines. Very clearly, therefore, the rural sector load has been pooled in by BESCOM only to provide a convenient scapegoat to mask its poor planning and management.

Coming back to the workshop - now, if people do not turn up in sufficient numbers at such meetings, it is not because they are satisfied with the services, it is plainly because of the futility of complaining to a government agency. Those who can afford have made alternate arrangements, and those that can't are any way voiceless. One would have thought organizations like PAC, Swabhimana, Consumer Advocacy, and even the KERC would bother to speak up for the voiceless.

PS: The above is the text of a posting titled 'customer-care-less' made on 20th March, '08 on my blog http://karnataka-power-mu.... Since it brings out all aspects of the matter, I chose to retain it as it is.

Related reading: http://bangalore.praja.in...

Muralidhar Rao

Comments

tsubba's picture

power

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the gujarat model of power was replicated in rajasthan and is likely to be replicated in karnataka, if the promises are to go by. meanwhile check out rajasthan Power to the people Rohit Parihar, India Today May 1, 2008 Rajasthan Chief Minister Vasundhara Raje is a risk taker. She often rushes in where her political counterparts fear to tread. Power, for her, has a different meaning, and in this case, literally so. Facing Assembly elections in November this year, Raje took the gutsy but politically suicidal step of cutting off power to 1,000 villages in four districts of Bharatpur division, an area from where she has a strong support base. The reason: villagers were notorious for stealing electricity and refused to pay for it, even after the state started providing uninterrupted power. This was three months ago when Raje realised that she needed to take some hard decisions if her power reforms campaign was to work. Bharatpur used to get a few hours of erratic power daily but even then twothirds of the supply would be stolen. Officials would be threatened and even assaulted if they tried to enforce the law. Raje decided to provide uninterrupted power, hoping that the villagers would mend their ways. Eight hundred villages in Bharatpur were given uninterrupted power which was later disconnected in six hundred fifty-two villages. It made no difference. She then ordered power to be disconnected, including in 166 villages in Dholpur, where she is the erstwhile maharani from. Three months of darkness were enough for the villagers to see the light. Last week, the villagers found their connections restored, but with a warning that if power losses exceeded 15 per cent again, disconnection would be swift. This is part of Raje’s effort to push the implementation of Rs 4,000 crore power reforms, mainly the feeder renovation programme. Of the 8,475 feeders in the state, 5,571 have been renovated, which means 22,280 villages are getting minimum 20 hours of residential supply every day and four-six hours of agricultural supply. The target is to cover all 35,000 villages by July end. The programme is aimed at segregating supplies for agriculture and domestic purposes to ensure that heavily subsidised power for agriculture was not diverted for domestic or commercial usage. The secondary aim is to curb power theft. Most distribution networks have been reinforced with insulated and specially armoured cables to bring down the incidents of illegal connections. One transformer has been installed for every two agriculture connections. Residential connections have smaller transformers, each supplying electricity to two dozen houses for 20 hours or more. The supply is metered at each transformer to identify the cluster of houses where consumption is higher than recorded in their meters. This has effectively curbed the diversion of agricultural power for residential usage. Raje had pushed the programme hard immediately after taking over four-and-a-half years ago arguing that curbing transmission losses was a better option than raising power tariffs. It would also improve the quality and duration of supply. She rejected suggestions by power officials to hike the rates, except for a one-time nominal increase. In most areas, an improved power supply has seen losses falling. This is quite an achievement considering the huge losses due to theft earlier. As a result, the state now has 99 per cent of power bills being paid. Tamper-proof meters have been installed outside homes, in the open. Special vigilance posts have been set up to book the culprits. Over a thousand were arrested before the illegal activity came to a stop. More than this though, a few months of adequate supply has made villagers realise the difference it has made to the quality of their lives. Because of lights in homes and streets, the crime rate has dropped and students can study at night. Families can watch television till late. The initial success of the programme has prompted the state Government to dangle some more carrots. Villages exceeding the population of 5,000 will get three-phase round-the-clock supply instead of single phase if they continue to show reduction in power losses. “We will be a power surplus state by next year,” Raje says, adding, “by August, it will be Diwali every night for the first time ever in the state.” Villagers are also getting used to paying more for longer hours of power. Laxmi Devi, sarpanch of Bachamadi village in Bharatpur, says longer usage has resulted in her bills, which are bi-monthly, increasing to Rs 2,000 from Rs 500 but the ones not complaining are people like electrician Mahesh of Chiksana village, who is getting more business now, as is Roop Singh, a welder from the same village who can now work for longer hours. The biggest benefit for all is a regular supply of water during fixed hours. Power reforms are never easy but to take such drastic steps with state elections a few months away was a huge gamble. For Raje, like the rest of the state, it could even mean a return to power.
silkboard's picture

"planned shutdowns" - a question

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One simple question, not a long rant. I am sure many of us see those "public inconvenience" columns in newspapers, where they usually have notices from BESCOM - "so and so areas will not have power from x am to y pm". Questions around these "planned shutdowns"

  • Very often, the reason given is maintenance. Why should maintenance work lead to power cut off? How do they carry out these maintenance jobs in the developed world where power shutdowns are rare?
  • If these are shutdowns due to shortage of supply, how does BESCOM decide where to keep it on and where to shut it down? If they do "rotation", do they do it in a fair manner?
Was just curious, and thought you may know this stuff.
murali772's picture

interesting question

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Like you say, it must be load shedding, disguised as maintenance.

My cousin is in a fairly senior position with Reliance Power in Mumbai, and he tells me that most residents there have no idea of a genset, or even a voltage stabiliser. And, only for very critical applications do businesses go in for gensets and the like. And, the tariffs are very much comparable, with sufficient concessions for the low-end users.

If you go to the KERC web-site and click on 'reforms', the privatisation path is all very clearly spelt out there. However, the vested interests keep coming up with various ingeneous ways of blocking it. The way things are going, the biggest money spinner in Karnataka is the 'stand-by (soon to become mainstay) power' industry.

Muralidhar Rao

Muralidhar Rao
silkboard's picture

Cost equations of un-interrupted/genset power

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Any stats on how much 'extra' these mid size businesses have to spend to get un-interrupted power? Let me just cook up some numbers, just for the sake of it.

Assume a mid size business with average consumption per day to be 10k units. Assume 30% of this coming from gensets. Further, assume 25 working days. So total units coming from genset will be 3K x 25 = 75 k units a month.

Now, assume the genset power costs Rs 17 per unit. If KPTCL/BESCOM could supply regular reliable power, costs could be Rs 5 per unit.

So the 'extra' expenditure this mid size company is making is 75K x (17-5) = 75k x 12 = Rs 900k = Rs 9 lakhs.

I will now have to make unreasonable assumptions about revenue/profits for a company consuming 10k units of power per day, so I will stop. But put some numbers here, and help us understand the cost equations (for businesses) of not getting uninterrupted and cheap power.

These days, you and me don't seem to complain much about power cuts (relative to traffic, housing etc), why? Because its possible to have a UPS, and having one doesn't really pinch our pockets. But, the UPS is like a hoarding device, isn't it!? Grab as much electricity as you can when its there. But you don't realize that you grabbing and storing power in those batteries is making the 'distribution' un-balanced and unfair towards those who can't afford a UPS.

Is there a similar thing for businesses? Those who can 'afford' gensets (upfront and running costs) have an edge over those who can't. Does this create a 'barrier' for small capital startups and very small businesses?

Okay, now that I have put my ignorance up here, please educate me.

s_yajaman's picture

Electricity numbers

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Silkboard,

Let's take an IT company with about 100 people working 10 hrs a day and see how it measures up with your 10K units/day.

Each of the 100 people has a laptop - 150W load.  10hrs - 1.5Kwh *100 = 150units.  Server - another 10 units.  Say 200 units.

Each person needs about 40 of cubicle space.  An equal amount goes in corridors, aisles, etc.  So you would need 8000 sft of office space.  One 40W CFL for every 40 sft - 200CFLs - 200*40*10 - 80kWh - round up to 100 units.

Aircon - probably 50-60 kW - 10 hrs a day 600 kWh or 600 units.  This depends on summer/winter/ambient air temp, etc etc.

We are looking at about 1000 units/day.  Per employee usage of 10 units/day.  Seems on the higher side, but we will stay with it.

(So your mid sized company would probably be having 1000 employees).

Let us continue with the 100 employee company.

We would need a genset with a 100kVA rating to keep this place going - assuming we go a bit easy on the aircon during power outages.

This aforementioned genset would consume diesel @ about 10 litres an hour (based on a trucks fuel economy at a steady speed).  Or about 100 litres a day or Rs.4000.  Diesel costs will be about 50% of the cost (need to add maintenance,depreciation,etc).  We are looking at Rs.8-10/unit and not Rs.17/unit.  This is because diesel is being subsidised.

Annual electricity costs @250 days working would be Rs.20 lakhs. Your hypothetical company would be looking at a revenue of about USD100,000 per employee per year?  Or about Rs.40 crores.  At the min Rs. 20 crores?  At most your incremental costs amount to 1% of revenue.

I doubt this will make or break a business.  No electricity will.

Srivathsa

 

 

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

namma_nadu's picture

will we see the light?

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Very interesting indeed. I agree with a lot of points mentioned here. UPS are basically inefficient energy guzzlers (monsters?) that you need to keep feeding just to have power for those few crucial hours or so in a month. Brilliant marketing aided by incompetent engineers at BESCOM and backed up by the politicians. Interesting to note that Gujarat followed by Rajasthan have shown the way -- both ruled by BJP -- but here Yedyurappa (i hope i got his spelling right) has promised free power. I hope an efficient power minister is brought in ( surely the reddys or the real estate kings will not take us there) who will herald these revolutionary changes. Adding to the energy consumption is the monstrous glass buildings which are increasing the AC usage in the day. (Wonder if these glass buildings should be charged a higher power rate or Diesel be charged at actual prices sans subsidy). On a different track - but i wonder if these builders/architects ever consider energy efficiency while making their plans? Maybe BESCOM / BBMP should charge a penalty for such energy guzzling buildings..
murali772's picture

working group on power?

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Yajamanre'

What you say may be true for well established operations. But, what about start-ups, and smaller scale operations, particularly in non-IT sectors? And, as the diesel prices go up, their survival itself will become in question.

Sri Aravind Limbavalli has been appointed the power minister. I had made a presentation to the FKCCI on the subject a few months back, which was fairly well received (though some of the genset mfr/agent members had knowing smiles on their faces). I would like to make the same before the minister. Shall we form another working group?

Muralidhar Rao

Muralidhar Rao
Naveen's picture

Power Reforms - Much Needed

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Interesting numbers & calculations.

I agree with Mr.Murali - power reforms can be rushed through & are actually overdue in karnataka. We also have many examples of success now, with rajasthan, a bimaru state showing us the way.

 

s_yajaman's picture

Not sure if captive power in itself is a bad idea

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Pranav,

UPS and hoarding - not so sure.  The better word would be storage during off-peak hours.  Electric cars would do the same thing and so am not sure why you treat UPS any worse.  Power plants work most efficiently at a high load factor (actual ouput/max output) and so as long as you pay for that electricity that you are storing you are not doing a huge disservice or being unethical.  Why is it making the distribution unbalanced?

If industries are in a position - have the scale and ability to invest - to have captive power plants - no harm.  They do cost benefit analyses before they invest.  There are no T&D losses and many put back power into the grid during their off peak hours (Bhoruka I believe is one example).  This is a sort of privatization isn't it?

Murali sir - BESCOM is only one side of the story.  They can only distribute what is available.  Agreed they do it fairly badly.  If there are good models for privatising distribution then we should go ahead.  But no Enron please.  The problem is that the people who negotiate with the big companies, don't necessarily safeguard the interests of the consumer, as they know which side of the bread is buttered.  You know what I mean.  Private is not necessarily better.  Look at those Bajaj autos - and they cost Rs.1.6 lakhs.

Srivathsa

 

 

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

s_yajaman's picture

Choose your power distribution co?

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Something interesting in Economic times. 

http://economictimes.indiatimes.com/Editorials/Delhi_shows_the_way_/articleshow/3091307.cms

Does not give too many details.

Srivathsa

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

murali772's picture

plenty of successful models

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Yajamanre'

I am sure you agree captive power entails wasteful use of fuel - the smaller the capacity of the set, the higher the wastage. In the apartment complex I stay in, captive power fuel cost alone is working out to Rs 17/- per unit. We are trying to figure out if there has been any pilferage of fuel. Instituting another check is another work, and therefore an additional cost.

Besides, the space these contraptions occupy could otherwise have been put to far better use. Any and every building complex today, has this contraption very often right in front, and even with improved aesthetics and acoustics, it is still an eye/ ear sore. Mumbai is totally rid of these.

You can feed power into the grid only if your capacity is fairly large. Besides, the synchronisation job is tricky and equipment quite costly. So, only the big johnnies can get into it.

Good models for privatisation - yes, very much - Mumbai, Ahmedabad, Surat, Greater Noida, even Kolkata, where private players have been providing fairly decent services from ages. The latest to join the lot, of course, is New Delhi. Though, initially, it was moving slowly, largely because of sabotage by the vested interests, things are now beginning to fall in place in New Delhi, and the position should soon be as good as in Mumbai. Check out the report by PRAYAS of Pune at
http://prayaspune.org/peg...

PRAYAS, Pune is a fairly professional set up, and can help any state/ city if it wants to benefit from the Delhi privatisation learnings. Interestingly, the GoK had long ago decided on the distribution privatisation path, and the KERC (Karnataka Electricity Reforms Commission) has supposedly engaged the services of PRAYAS as an adviser also. But, implementation, based on the advice, is another matter altogether.

For the rural areas also, there are many successful models/ approaches available. Rajasthan's (initiated by Vasundara Raje Sindhia) is one. However, unless you separate urban and rural loads and tackle them differently, you cannot make progress. But, unfortunately, that's exactly the objective of a handful, but powerful lot who want to perpetuate their vested interests.

Enron was the biggest racket ever, but worked by the politicians themselves. I had myself opposed it tooth and nail. Whatever, that is generation. The imperatives are of privatisation of distribution.

Muralidhar Rao

Muralidhar Rao
silkboard's picture

Sri, your numbers

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Your numbers are on lower side (to project captive power costs ), while mine are on the higher side. Rs 17/unit is something I have heard from people. And revenue of 100K USD per person is also on the higher side. But even after toning down the numbers, we may not go beyond 3-4% of revenue. Also, lower the profit margin, higher will be the ratio w.r.t profits.

Your point about UPS is right. I call it "hoarding" only because its a resource in short supply. But that is unfair. I call water storage in those large open cement tanks in so many houses in Bangalore also hoarding. If nobody stored water locally like that, will we then have more regular water supply?

Back to the gist of Murali sir's post, what are the estimates on T&D losses in Karnataka? In Bengaluru? Loss/stealing ratio higher in urban areas, lower in villages, or reverse or same? We all need some more education and to understand and "recruit" more interest in the subject here on Praja.

murali772's picture

power to the people

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According to the last Economic Survey growth in electricity generation decelerated to 6.6 per cent in 2007-08 from 7.5 per cent in 2006-07. Slowly growing capacity is not the only problem. Transmission losses amount to a whopping 35-40 per cent. And that's not just a euphemism for power theft, which authorities can't crack down on because they lack the political will. It's also a function of the fact that transmission lines are badly maintained and insufficiently metered.
 
Better monitoring would identify where the losses take place, which in turn would allow leakages to be plugged. Legislation ought to mandate smart metering, and India's IT prowess can be pressed into service to implement it. The Electricity Act, 2003, was supposed to ease entry of private players into the power sector, but there has been insufficient follow-through on the part of the government. Speedy clearances as well as a proper regulatory environment are essential if the private sector is to play a greater role in power generation, transmission and distribution. Read more at
http://timesofindia.india...

Muralidhar Rao

Muralidhar Rao
murali772's picture

crux of the problem

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Many industrialists blamed the government for the problems being faced by them. “The BESCOM and the KPTCL officials are quite capable of managing the situation. But due to the excessive intervention of the government, they are unable to deliver the goods,” an industrialist opined. Citing an example of government mismanagement, an industrialist, under the conditions of anonymity, said that the state had lost more than 180 MW of co-generation capacity as some of them have not been paid off for more than two years.

For the full story, click on:
http://www.expressbuzz.com/edition/story.aspx?Title=State+govt+making+industries+%E2%80%98powerless%E2%80%99&artid=0zjSN2W4Xxo=&SectionID=7GUA38txp3s=&MainSectionID=fyV9T2jIa4A=&SectionName=zkvyRoWGpmWSxZV2TGM5XQ==&SEO=

And, interference by politicians is inevitable in the public sector. And, that's why these services have to be privatised as has already been decided by past governments, but prevented by various vested interests.

Muralidhar Rao

Muralidhar Rao
murali772's picture

further reiteration

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The problem is mainly related to transmission and distribution and if it is not streamlined in Bangalore, where there is 80 per cent recovery, the entire system will collapse, he cautioned.

For the full text, click on:
http://www.expressbuzz.com/edition/story.aspx?Title=Moily+blames+govt+for+worsening+crisis&artid=PlQh8g4FSL0=&SectionID=7GUA38txp3s=&MainSectionID=fyV9T2jIa4A=&SectionName=zkvyRoWGpmWSxZV2TGM5XQ==&SEO=

Muralidhar Rao

Muralidhar Rao
murali772's picture

Public sector vs Private sector - impact on consumer

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Additional burden a consumer has to bear when the distribution is with a government agency (like BESCOM in Bangalore), as compared to when it is with a private agency (like Reliance in Mumbai):

1) Speed money at the time of installation.
2) Careless installation practices, leading to repeat breakdowns, and costs thereof for repairs (apart from opportunity costs over time and effort involved in restoration)
3) Poor quality of transformers and other equipment, leading to repeat failures due to overload, and costs thereof.
4) Poor quality of supply, leading to the need for investment in and operation of stand-by power equipment.
5) Energy theft, in connivance with meter readers and engineers, camouflaged as T&D losses, necessitating frequent tariff increases, or financial instability of the service provider.

When privatisation happens, many mafias will go out of business, and the consumer is generally rid of most of the above problems. But, mafias' loss can become lobbyists' gain. This happens if the terms of engagement of the private agencies get 'fixed' to the detriment of the consumer, like it happened in the case of the notorious ENRON, and is happening even today, like in the case of Rs 1 lakh crore '3G spectrum allocation' scam centred around the DMK minister, Raja

(http://epaper.expressbuzz.com/NE/NE/2008/12/17/ArticleHtmls/17_12_2008_010_001.shtml?Mode=1).

The answer to that is transparency, the mother of all requirements. But, this is required even when entrusting a job to the public sector agency. The problem with government agencies is that, sooner or later, the mafias will take over. So, why not engage private agencies in a transparent manner and get rid of all the problems, once for all?

Muralidhar Rao

Muralidhar Rao
murali772's picture

Nobody wants to invest in this huge opportunity

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NO MoU IMPLEMENTED: In 1990, the Central Government made drastic changes in its electricity policy and opened up power generation for the public entrepreneurs. Karnataka Government too had, since then, signed many memorandums of understanding. But, interestingly, none of them have been implemented.

From July 28, 1992 (in Boston, USA) to August 3, 1992 the then chief minister S Bangarappa signed 11 MoUs with different agencies to generate totally 5010 MW power. None of them have come up so far.

In 2001 during S MKrishna’s tenure a MoU was signed to generate 300 MW. Later H D Kumaraswamy, as chief minister and the energy minister signed a MoU to have a total power generation of 1040 MW. Both have not been implemented so far.

PRIVATE SECTOR In the same period from 1992, however, many private companies had installed their own power generation units. Total power generation from these four stations is 588.83 MW.

For the full report, click on:

http://www.expressbuzz.com/edition/story.aspx?Title=State+govt+to+buy+300+MW+power+from+Chhattisgarh&artid=ZEqRDMJe/MY=&SectionID=7GUA38txp3s=&MainSectionID=fyV9T2jIa4A=&SectionName=zkvyRoWGpmWSxZV2TGM5XQ==&SEO=


The reason is clear as daylight, but for those who want to see. Why would anybody want to invest huge monies and forever remain at the mercy of the monopoly government customer, namely KPTCL, who can pay you only in 11 months?   

Muralidhar Rao

Muralidhar Rao
murali772's picture

UP franchising out power distribution

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Power distribution in UP cities to be franchised out - check:

http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JQkcvMjAwOS8wMi8yMiNBZDAxMjA1&Mode=G&Locale=english-skin-custom

Perhaps the model for Karnataka also. It's quite a miracle that the existing arrangement hasn't collapsed yet. But, it can happen any time!

Muralidhar Rao

Muralidhar Rao
murali772's picture

State ranks second in power theft cases

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Why is Karnataka experiencing more blackouts than any other state in the country? The Centre has figured out that unscheduled load shedding in the state is due to high rate of power pilferage. In fact, Karnataka comes next to Andhra Pradesh in power theft. Even as the government plans to provide 24-hour supply to industries, little has been done to plug power leakage.

According to figures compiled by the Centre and released recently, 45,982 cases have been booked by the state government for power theft in the last three years. In 2005-06, the government registered over 16,000 cases. There were 14,435 cases in 2006-07 and 14,841 in 2007-08. AP recorded a mammoth 5.91 lakh cases during same period, while the all-India figure for the last three years stands at 7.42 lakh cases.

"Electricity theft is one of the major factors impacting the financial health of power supply agencies, resulting in frequent load shedding and unscheduled outages. The financial health of power utilities is also a criteria for assessing the viability of new investment," the central report said.

Estimates have revealed that all-India `aggregate technical and commercial loss' is 30.56%, with power theft being the main reason for the loss. While Karnataka and AP have high rate of power theft cases, five states -- Himachal Pradesh, Manipur, Mehghalaya, Mizoram and Punjab -- recorded zero case. Tamil Nadu reported only 51 in the last three years.

For the full report in TOI, click here

Muralidhar Rao
tvidya's picture

BESCOM Service

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While I agree with Dr Paul about improvement in service from BESCOM, poor attendence to  meetings are due to

1. Frustration of people saying that nothing can be done by meetings.

2. Lazyness, traffic hazzles, let some one else do it. I have done enough in my life. GOK with these guys who never would have contributed except for themselves.

3. People are fully satisfied and no meetings are needed.  This is absolutely not correct.

Meanwhile (I do not know  how relevant is my view here ) I read some where that if the whole country goes for CFL lamps the saving of electricity will be around 20,000 MW .To generate the same power India needs to spend a few thousand crores .Not only the saving but also the prevention of pollution by way of spreading of sulphuric acid due to emission of Sulphur from Chimneys when Thermal power stations are   the producers of power. I understand that Rs 2500 crore is being spent to generate thermal power of 500MW .

T.Vidyadhar

murali772's picture

interesting report on rural power distribution co-op societies

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The cooperative movement has touched even the power sector. In addition to power generation the cooperatives are performing a significant role in the distribution of power.

In the State 6 Rural Electrical Cooperative Societies are registered. Of which Rural Electrical Co-operative the Society, Hukkeri, was registered in 1969, and as on 31-12-2007 it has 67366 members, a share capital of Rs. 2.92crores (of which Government share is Rs. 41.70lakhs) and Rs.7324.39 lakhs as working capital. As on 31-12-2007 it has provided electricity to 107 villages, 15 hamlets and 14 rehabilitation centres.It is functioning as an alternative to KPTCL., in power distribution.

Source: http://sahakara.kar.gov.in/othersoc.html

I had talked about the Hukkeri society in my opening post too. But, from the exchanges I had with a senior official in BESCOM/ KPTCL, it appears they are doing everything possible to kill them in order to perpetuate their monopoly.

 

Muralidhar Rao
murali772's picture

why would anybody invest?

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"The gap between demand and supply of power is growing by the day: it was 3-5% in 2004, and is now estimated to be 15-20%. Karnataka needs to augment 1,000 MW per annum, which needs an investment of Rs 5,000 crore every year. But we ended up generating only 200-300 MW since 2001. The public sector can stretch its investments to Rs 2,000 crore only. The rest of the investment has to come from private operators, but we have hardly any" - K Jairaj, Principal Secretary, Power, GoK, quoted in TOI - check this.

The question that arises is how will the private sector invest in the state, when for getting the the monopoly customer, viz KPTCL, to comply with any and every aspect of an evacuation contract, particularly payments, the private player has to run to the courts? So much so, GMR Energy Ltd said enough is enough and moved their 200 MW barge-mounted plant from Tannirbhavi to Visakh. Others would also have perhaps liked to move out, but being land-based, they are stuck.

The genesis of the problem lies in the continued monopoly of the state in distribution, as already elaborated upon in the opening post. Unless that is addressed, there's no easy solution.
 

Muralidhar Rao
murali772's picture

old equipment!

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The power generating units are too old and are not able to meet the demand. This is what K Jairaj, principal secretary, energy department, has to say about the huge power shortage the state is facing. For the full report in the TOI, click here.

Now, doesn't that sound a bit strange? What does a business do when its equipment have become old and can't perform to the required capacity levels? Replace them, right! So, why isn't KPCL, the company that manages these generating stations, doing that? Very simply because they are forever cash-strapped, inspite of making reasonable book profits, a fact that Mr Jairaj can't quite afford to say, since otherwise he may find himself shunted out to some inconsequential post, possibly outside Bangalore. KPCL's near 'bankrupt' position is evident from the Current Ratio of its operations being at 5.27:1 (from its web-site).

The current ratio (from wikipedia) is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. A current ratio of assets to liabilities of 2:1 is usually considered to be acceptable (ie. your current assets are twice your current liabilities). If the current ratio is too high, then the company may not be efficiently using its current assets or its short-term financing facilities. This may also indicate problems in working capital management.

And, the reason for this is the incapacity of the ESCOMS to pay KPTCL, and in turn KPTCL's incapacity to pay KPCL. And, the ESCOMS incapacity results out of a majority of them being largely dependent on government subsidy, which never gets disbrused on time. As such, as long as all these operations, particularly distribution, remains with government agencies, there's no redemption. The irony of it all is that, even as this is the position on the ground today, the government is inviting more and more investment into the state. I can't quite understand why anybody would want to invest in the state when as key an infrastructure sector as power is in such a dismal state. And worse, there's no light at the end of the 'dark' tunnel, either.

Muralidhar Rao
murali772's picture

what's this GIM about?

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Through an RTI query, I collected the following info on KPCL's finances (they are not very evident from the info provided on the web-site, and, I suspect, with reason):

Its customers are just KPTCL and the DISCOMS, all government-owned. The debtor-days works out to 402, meaning, for the Rs 417 cr that it billed on an average every month (09-10 figures), it is paid in 402 days, ie almost 13 and a half months later, the best debtor being BESCOM paying in almost 4 months, and the worst being GESCOM paying in 20 odd months. The gross debtor-days figure worsened from 295 in 07-08 to 339 in 08-09 to 402 last financial year. So, BSY can't get away saying it's a legacy carried on from the past.

I wonder if there's any other 'business' in this world which will have any where comparable figures. My Socialist friends may want to say that this is not a business; it's a service. Well, then, please declare it as such.

Well, now it becomes clearer why GMR Energy Ltd packed up their barge-mounted plant from Tannirbhavi and towed it away to Visakhapatanam. Others, which are mostly captive power plants with excess generation capacity, are left to playing hide and seek with the government, with the judiciary being called to intervene when the government tries its arm-twisting tactics, particularly during the summer months.  

As such, it's not surprising that the Udupi Power Corporation Ltd (whose 1000 MW imported coal based thermal power plant is set to become operational soon) web-site states, amongst other things, that necessary Power Purchase Agreements (PPAs) have been made with the five Escoms/Discoms of Karnataka, to whom 90 per cent of the power is to be supplied, the PPAs being covered by a three-tier payment security consisting of Letter of Credit, Escrow and State Government guarantee.

The balance power will be supplied to Punjab. The Punjab option I guess is an insurance against the incapacity of the Karnataka ESCOMS to evacuate power on account of reasons stated above. They will besides be exploring the option of selling to the Power Trading companies too, I am sure.

The question that arises time after time is how is any industrialist in his right senses going to be investing in the state where the basic power infrastructure sector is in such a dismal state. So, what is this GIM all about?
 

Muralidhar Rao
murali772's picture

how to kill a well run govt company

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Udupi Power Corporation Ltd (whose 1000 MW imported coal based thermal power plant is set to become operational soon) web-site states, amongst other things, that necessary Power Purchase Agreements (PPAs) have been made with the five Escoms/Discoms of Karnataka, to whom 90 per cent of the power is to be supplied, the PPAs being covered by a three-tier payment security consisting of Letter of Credit, Escrow and State Government guarantee.

When I made the earlier post, the full meaning of the above lines hadn't quite sunk into me properly. Now looking at it afresh, I can see that there is going to be a literal stampede of industrialists wanting to get in. But, given the existing scenario, how is the government proposing to manage the funds situation? The easiest way out for it would be to hold back the payments to KPCL further, which will essentially mean tightening of the noose around its neck, till it chokes. But, the damage of an otherwise fairly well run company can even become irreversible.

The question that arises here is, if the government can offer such terms to a private party, why can't it do the same for its own company? Isn't it plainly because of lack of accountability? When government didn't honour the commitments made to GMR, they just towed the plant away to Visakh, and Jindal Steel and others have taken them to court. KPCL alone is made to shoulder the burden, just because it's a government company. Is there a clearer case as to why the government needs to be distanced from the ownership of such companies?

Call it disinvestment, call it privatisation - whatever, that's the only survival route available for KPCL if it has to be saved from the reckless politicos. Otherwise, it's going to suffer the same fate as NGEF.
 

Muralidhar Rao
murali772's picture

many questions unanswered!

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Last Friday (11th June), Mr K Jairaj, IAS, Addl Chief Sec in-charge of Power, addressed a meeting of the Bangalore International Centre at the TERI premises. The introductory talk was given by Mr S L Rao, the country's very first CERC, who also went on to moderate of the discussions that followed.

Mr S L Rao, being about the most knowledgeable person on the subject, perhaps in the whole of the country even, spelt out things quite exactly as they are. And, there was no denying them. An important point that he made in addition was that power should be seen as a product and not as a service, meaning of course that there were costs to providing it, and people who wanted it, should be prepared to pay for it.

Another point that he made was that anyone passing the extremely competitive IAS exam has obviously to be intelligent. But, that doesn't necessarily make him a competent manager, and the years spent in the government, only helps to blunt whatever sharpness there may originally have been in a person. He added that Mr Jairaj in that respect was amongst the exceptions. His capabilities came to fore first when he became the MD of the KPCL, the company's performance gaining considerable momentum thereon.

A point of note Mr Jairaj made in his address (backed by a ppt presentation) was that the number of metered customers in the state had kind of plateaued. This was of course the rural agricultural load, irrespective of how big or small the size of the operations. If I remember right, he said that close to 50% were non-metered currently, and, in such a scenario, he quite openly admitted that the loss figures meted out (by the ESCOMS) in the case of the rural loads were just guess-timates, with proper audits just not possible. All the same, he claimed that in the urban areas, the metering was 99.99%, particularly in the case of MESCOM (Mangalore), and BESCOM, and consequently, the loss levels were down to 5.5% and 8.8% resply, comparable with the best in the country, or world even.

To my query (during the interaction session) as to how they could make such accurate estimates of the losses in the urban areas, when the urban and rural loads were clubbed together (perhaps deliberately to cover up the inefficiencies even in the urban set-up), Mr Tushar Girinath, MD, BESCOM, came on to say that they were already in the process of separating the two, and further, in the case of the rural loads, they were in the process of separating the agricultural load (irrigation) from the other regular domestic load, under the 'Nirantara Jyoti' programme, based more or less on the Gujarat model.

Now, this has been talked about from long. It is not an easy task and calls for a huge financial outlay. And, with funds availability being difficult, how much has been achieved, or how much can be achieved, is anybody's guess. As such, I still have my doubts about the low loss claims. Urban and rural loads have totally different characteristics, and ideally, these have to be handled by different companies altogether. The government refuses to do that, in order to provide for cross-subsidies, and thereby you land up with the problems of audit, and many others.

On the matter of the 99.99% metering, Mr Jairaj and Mr Tushar Girinath (as also the MESCOM MD) invited me to take a walk along with them in areas of my choice, and check for myself the veracity of their claim.

My servant maid, who lives in a neighboring LIG locality, has told me that the situiation is a lot different on the ground. Perhaps, I need to make a check myself. Volunteers who may want to join in the exercise are welcome.

Mr Jairaj talked about his visit to Gujarat, along with the state power minister, Mr Eswarappa, and their meeting with Mr Narendra Modi. He was all praise for Mr Modi's administrative acumen in having achieved 100% metering in the state, which has made for all the difference in the power scenario there compared to any other state in the country.

Actually, therein lies the crux of the problem. The question that arises simultaneously is why is it that as high profile and senior a bureaucrat as Mr Jairaj has not been able to convince the Neta's about the inevitability of following the Gujarat model of 100% metering, even looking at it from the political angle. That is exactly where Mr Jairaj's performance can be seen as wanting, particularly considering the alarming state that this has got the KPCL, the very company that he had nurtured to such high performance levels, into.

To another of my queries on whether he considered the Hukeri Co-Op Society model a satisfactory one, he responded in the negative, adding more or less that the subsidy element was upsetting the entire working - perhaps

My last question, as to whether the government was considering reversing the stated policy of privatisation of distribution, in view of the commendable achievements of the ESCOMS in reducing the losses, didn't appear to go down too well with him. He deprecated the tendency amongst people to deride bureaucrats as incompetent babus, making out as if only the private sector lot was capable of running things. He added that, if not for political interference, the bureaucrats can do as well as or even better than the managers in the private sector. The audience empathised with the stance by a round of applause.

Obviously, he has read at least a few of my blog-posts - perhaps, many in the audience too. But, my criticism of incompetence has not been of individuals, but the organisations. Yes, political interference is the problem, and as long as the government is the majority owner, it becomes difficult for the bureaucrat to prevent it. And, that precisely is why I have repeatedly been demanding that governments get out of manufacturing goods and providing services, and concentrate on the more important functions of facilitation and regulation.

At the end of it all, so many questions remained unanswered. And, unfortunately, even the man at the very top does not seem to have the answers! Well, we can all blame the political system - what else to do?


 

Muralidhar Rao
idontspam's picture

Smartmetering in Bangalore

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The concept of smart meters was proposed on June 24, 2009. And now after almost a year, the government is yet to promote it among officials and to start the pilot project in Electronic City. According to Bangalore Electricity Supply Company (Bescom) officials, the Rs36 crore project will take another 36 months or so to be introduced.

It is sad that the government is still dithering about it even after a year. In the UK through this over, they have saved 20% energy and in New Delhi, 15% energy has been saved. This bold initiative is yet to start in Electronic City as a pilot project. The government ought to speed up the process

Source

I think the Discoms would rather have the grid be dumb. So when the toothbrush is presented, people will line up to get the shit out of their mouth with glee.

murali772's picture

No one to bell the cat!

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The uncleared power subsidy to farmers, which has accumulated to the tune of Rs 3,922.63 crore, may force electricity supply companies (Escoms) to look towards consumers for mopping up resources. The Karnataka Electricity Regulatory Commission (KERC), in its 2009 tariff order, had directed the state government to pay the amount to Escoms. But the government has gone on appeal against the order. In its review petition filed before the KERC in February, the government said: “While passing the tariff order, certain errors crept in. This has resulted in a huge burden on the exchequer, amounting to Rs 3,922.63 crore as subsidy payable by the government". Taking this into account, the government has filed a petition seeking rectification of the anomalies. “Tariff increase proposed by the Escoms is to an extent of 51 paise per unit. KERC has worked out the average cost of supply and tariff for IP sets in respect of each of the Escoms and has arrived at the following tariff for IP sets: Bescom Rs 1.46 per unit; Hescom Rs 3.80 per unit; Gescom Rs 3.11 per unit; Mescom Rs 3.70 per unit and Cesc Rs 3.42 per unit”. In the review petition, the state government has said that the commission has arrived at differential tariff for Escoms and cost of supply in respect of companies other than Bescom is sizable, and the same has resulted in manifold increase in the amount of subsidy payable by the government.

Sridhar Prabhu, an advocate in the power sector, said section 65 of Electricity Act states that if the government refuses to pay subsidies, the utilities can collect that money from other sources. The Escoms are already facing a crunch as they are unable to pay the Karnataka Power Corporation. The total amount the five Escoms and KPTC have to pay KPC as of 2009-10 is Rs 5,511.54 crore.


For the full report in the TOI, click here.

Very clearly, the government is just refusing to come to grips with the grim scenario. Looks like it will wake up only when it all crashes. Meanwhile, states like Gujarat are forging ahead at the cost of our otherwise well endowed state
 

Muralidhar Rao
Ravi_D's picture

Who runs these boards?

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Isn't it criminal to not account for (or willfully mis-state) revenue and expenditure for any statutory entity? How can xxxCOMs and GOK get away with such mismanagement? Is CAG the only body that can question them? 

In any case, as usual, we the ci(nut)tizens will end up bearing it all. More taxes, or higher rates.   

murali772's picture

How not to help renewable energy entrepreneurship - the GoK way

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check this

Muralidhar Rao
idontspam's picture

Extremely sorry electricity

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Extremely sorry electricity situation in Bangalore. This has been the situation for not 1 or 2 years but more than 15 years as I know it. Our Neta & Babu Neros are fiddling as Blore burns.

Anybody know how much capacity has been added in the last 10 years and what is the addition planned for the next 20?

murali772's picture

different kind of a capacity problem

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The problem is not as much in the capcity to generate as in the capacity to pay. And, of course, when you can't organise yourself to effect payments on time, the capcity also gets eroded - check this.

"and one unit of Raichur Thermal Power Station had started functioning" quote from the TOI (for the full report, click here), is also indicative of the same malaise.

And, if you can organise yourself to pay, there is plenty of capacity within the country that you can tap from, and at reasonable rates. And, for that, the ESCOMS have to liberated from the government's clutches - there's no other way.
 

Muralidhar Rao
murali772's picture

the camouflage

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Interesting excerpts from a New Indian Express report (accessible here)

The KERC has asked the state government to pay the subsidy amount for free power starting January. The state government had filed a petition with the Commission stating that the Rs 3,428.36-crore subsidy to farmers was a “huge burden”. The petition had sought that the subsidy be treated as regulatory asset and be passed on to other consumers.

“MESCOM has been misusing the subsidy by presenting inflated figures. There is 500 million unit of exaggerated figure for irrigation pumpsets,” said Shridar Prabhu, energy sector advocate. “What is disheartening is that the regulatory commission has not even uttered a word on the matter.” He said the regulatory commission has the power to probe the matter, but did not do so.


There's no solution to the power problem as long as the management of subsidies remains a problem. At least, it can be isolated to the where it originates (ie in the rural areas), and handled differently. But, then it becomes difficult to camouflage thefts as losses (as MESCOM is allegedly doing), and so, the tamasha continues.  
 

Muralidhar Rao
murali772's picture

When will we learn to accept the realities?

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The supply is not up to the mark. Power exchange is semi-automatic. If the transformer is unable to take the load, we have to go for outages. Even posh areas have not been spared. If you look at some areas in East Bangalore, they have more power cuts because of system constraints. The transformers cannot take too much load. To replace one transformer of higher capacity, we need to spend at least Rs 3 to Rs 4 crore. We need to upgrade the system and for that we need finances.

Who said we have modern equipment? The transformers in some areas are rather old and need to be replaced. The government must modernise public services. We are struggling.

Only 5% of electric wires in the city are insulated. Funds is the constraint. We require Rs 1,500 crore to insulate wire of 2.5 lakh km in the city. I know there are no excuses when there is death involved. We plan to insulate wires that run over public spaces, schools, etc. This would cost us Rs 400 crore to Rs 500 crore.

Smart grid, a common feature in Europe and the US, is an intelligent network that monitors power consumption from the central control room. It would deliver electricity from suppliers to consumers using digital technology. The constraints in implementing this are manpower and investment.


The above are excerpts from an interview with Mr Manivannan, BESCOM, MD, published in the ToI (for the full text, click here).

What is discernible from the above very clearly is that there is a perennial funds shortage. Now, even if Mr Manivannan - the task master that he is - manages to reduce the T&D losses to a respectable level, BESCOM will still, at best, be able to carry on its day to day operations, leaving very little if at all for modernisation. Manivannan suggests here that "government must modernise public services". The question that arises is that when the government is already burdened with the provisionings for more essential goods and services, should it take on this burden also, particularly when the private sector can do a better job of it all - like in Mumbai, Ahmedabad, Surat, Greater NOIDA, Kolkata, etc.

Muralidhar Rao
murali772's picture

efficiency surcharge

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Bescom managing director P Manivannan said: “We are not able to purchase hydel power because of the government order. We have no autonomy to choose the kind of power we purchase. Other Escoms, like Gescom and Hescom, are given hydel power which is cheaper as they are facing a financial problem. We have to purchase high-cost power.”

For the full report in the ToI, click here.

Essentially it means that if you manage your finances well, you will be penalised with a higher charge on your inputs. Why would any one bother to manage the finances well - except say a Mr Manivannan?

Well, as long as these entities remain with the government, such artificialities are inevitable, and the citizens will be forced to shoulder the extra burden. The answer plainly is privatisation.

Muralidhar Rao
Sanjeev's picture

Mis managment of Power Generation like road widening

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As the RTPS Raichure has 8  generation stations and Bellary has also has bee commissioned.  Fact is  both together are generating 30% of the Installed capacity ( approximat ),   here also the road widening  dieses has spread.  These plants are owned by KPTCL and not BESCOM or HESCOM

The reason for not operating full capacity is

1. Coal is not available, 

2.  Poor maintenance  of  Plants & Machineary

3. No accountability of the KPTCL  for their poor operating.

Even their was case of Diesel mafia doing work at RTPS Raichure last year.

And theri may be other factors which we are not aware of  poor generation of power.

As new plant / addition of  power generating capacity may have more advantage  for Private player ( can make more money )  instead of getting old plants of RTPS / BELLARy to get them in full capacity

Sanjeev's picture

T-stir hits power supply : who should be blamed

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Agitations in Telangana region of Andhra Pradesh has affected supply of coal, leading to unscheduled load-shedding in the State

Minister for Energy Shobha Karandlaje said transportation of coal from Singareni in Andhra Pradesh and Nagpur was halted due to the agitations. The State is now short of 1,500 MW power everyday.

Three of the eight units in the Raichur Thermal Power Station, have been already shut down. Unscheduled load-shedding is being resorted to across the State to cope with the crisis. Karandlaje told reporters in Bangalore on Monday that a decision was yet to be taken on announcing scheduled load-shedding

http://www.deccanherald.com/content/193902/t-stir-hits-power-supply.html

We are also facing a shortage of 300 MW to 350 MW of power from the Central generating stations of NTPC – Simhadri and Ramagundam. Karnataka is being supplied only about 1000 MW everyday, as opposed to 1534 MW allocated to us from the Central share,” she said.

The State has been getting only less than 100 MW from wind energy, despite the 1,000 MW generating capacity, she said.

“We have decided to purchase 630 MW of power from Jindal, Lanco and other sources to tide over the present situation,” she added.

Why Center is allocated more then the decided share to other states where Congress has govt & Karnataka is neglected on this.

Now here is Power purchase at higher price which will be passed to consumers soon.

Energy department, which is adding another 230 MW from October 1, had also called tenders for purchase of 500 MW. However, as the rates were on the higher side – Rs 4.96 per unit, the department has decided to call fresh tenders

So following factors T - stir Factor, Central Factor, in-efficiency of KPTCL to maintain all  units up & generating pwoer & corruption.

 

 

srinidhi's picture

normalization is usage necessary..

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feels really sad when I see high power vapour lamps used in narrow streets which is of no use in anyway..also these lights are lit way into the morning..

The Ganesha pendals and other functions drwaw free power from the naked lines..such instances are many and getting some reasonable control on this would help to a good extent..

 

murali772's picture

regulatory commission or controlling commission

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With Bescom area facing a shortage of 500 to 600MW, the company has written to KERC seeking to purchase 27,000 million units of energy. But it says the cost of power has shot up with increase in demand. The power purchase cost during 6pm and 10pm has increased from Rs 4 to Rs 9 per unit on Wednesday. So Bescom says it is unable to purchase power at this prohibitive cost.
    
Bangalore City alone is facing a shortage of 500 to 600MW during peak hours every day. Bescom MD Mr Manivannan said they are were planning to make time-of-the-day tariff mandatory. “We have filed a petition before KERC. That would mean higher rate for power during peak hours and relatively lower rate for nonpeak hours. Besides, we are planning to make pre-paid meters compulsory,” he said


For the full report in the ToI, click here

With having to seek their permission for anything and everything, the Regulatory Commissions appear to be working more like controllers than regulators. What does not seem to be quite appreciated is that, due the built-in inflexibility, the consumers are having to resort to self generations at almost twice the tariff rate, for longer hours.

All in all, the entire power scenario in the country seems to be in a royal mess.

Muralidhar Rao
Sanjeev's picture

Look at how Karnataka is going to have power in coming days

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Power mess to worsen 

Already mired in a deep power crisis, Karnataka is set to face much worse in the weeks to come, with the Sharavathi generating station near Jog Falls, which supplies half of the State’s power demand, likely to be shut down for at least two months 

The shutdown of the plant, highly placed sources in KPCL admitted, will cut power supply to half of the State during peak hours. Hydel power is the cheapest, sustainable and renewable sources of power costing 30 paise per unit to produce 

So the Sharavathi closure will not only aggravate power shortage but also inflate the State’s power bill to the breaking point, as the power utilities will be forced to make purchases from other sources 

http://www.deccanherald.com/content/194639/power-mess-worsen.html

As the situation is more worst in other states like Delhi, Haryana, UP, Punjab & Maharastra.

So this resource is going to be more in demand and will futher push the cost for consumers.

 

 

n's picture

With having to seek their

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With having to seek their permission for anything and everything, the Regulatory Commissions appear to be working more like controllers than regulators.

Some interesting read here (long-winded) and here. Appears that there is not a simple solution.


murali772's picture

huge challenges

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Between 1907 and 1940, all states formed regulatory commissions

Thanks n for the providing the links to the regulatory scene in the US. Very clearly, the regulatory bodies there have evolved through learnings over far longer periods than those of ours, and consequently appear better equipped to manage the situation through the current trying times. But, there are huge challenges ahead both here as well as there, which if addressed correctly can be seen as opportunities.

Muralidhar Rao
murali772's picture

Perennial crisis

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The power crisis unfolding in Karnataka is as much a consequence of developments that were beyond the pale of the authorities as it is of their acts of commission and omission.

For the full report in the ToI, click here.

What's missing in all of these debates, whether in the statements made by the neta-babu combo, or by the industry honchos, is the key element of the chronically unhealthy state of the sector's finances, epitomised by this report. Unless a solution can be found for that, it's crisis all the way and all through.

Muralidhar Rao
murali772's picture

never ending saga

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Noting that high power distribution losses are adversely impacting generation capacity, CII has called for urgent reforms in distribution. With the bulk of the additional capacity being financed on the basis of long term PPAs, the deteriorating financial position of (largely) state-controlled utilities is a key concern and the ability of these utilities to fulfil these commitments should indeed be carefully evaluated, feels Sunil Wadhwa, Chairman, CII Core Group on Distribution Reforms and Smart Grids and Managing Director, New Delhi Power Ltd.

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

Enough has been said. The question is when are genuine reforms going to happen?

Muralidhar Rao
murali772's picture

so, get on with it!

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Well, here you have both adviser to the CM, Mr A Ravindra, and the KERC Chairman, Mr M R Srinivasa Murthy, both advocating privatisation of power distribution. In fact, the government had decided decades back that that is the way forward. So, what's anybody waiting for?

Currently, with Mr Manivannan at the helm, BESCOM services have improved considerably. But, BESCOM finances remain in the doldrums, and no Manivannan, or anybody, can do much about it - check this. The inevitable answer is privatisation - the earlier we implement it, the better for all concerned, more particularly the 'aam aadmi' - check here how Delhi has benefited from it.

Muralidhar Rao
murali772's picture

power sector circus, though not al all funny!

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Sources in the Karnataka Power Corporation Limited (KPCL) said BTPS will soon receive coal for putting its second unit in operation —  which has a capacity of 500 MW and has been sitting idle since February this year. The state government could not secure a steady supply of coal for it despite repeated requests to the Centre. The Centre, according to officials in KPCL, had backed out of supplying coal to the power station after assuring that 2 million tonnes would be given from Mahanadi Coal Fields (MCL) in Odisha.

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

Over two years back, I had pointed out how KPCL was being given a raw deal - check this. The situation hasn't changed much since then. It's a miracle that things on in this country at all.

Muralidhar Rao
murali772's picture

financial indiscipline

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Chief Minister Jagadish Shettar has instructed the Udupi Power Corporation Limited (UPCL) to resume power supply  to Bangalore Electricity Supply Company Limited (BESCOM) from Monday. UPCL had stopped power generation due to a delay in payment of its dues. This had resulted in unscheduled power cuts in eight districts coming under BESCOM, including Bangalore.

- - -  On stoppage power generation from UPCL, Shettar asked the authorities concerned to first resume power generation from Monday  and that all contentious issues such as payment would be decided by the government. The authorities “in  principle”  agreed to resume power generation from Monday, sources noted.


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

This is the kind of attitude that has caused the power sector in the state to languish the way it has all these years, leading to greater and greater dependency on gensets. And, as long as the sector (particularly distribution) remains in the hands of government players, such financial indiscipline, and the resultant unhealthy state of the sector, will continue. Delhi government has shown the way out of this conundrum - check here. If the other states are serious about finding solutions to their unending power problems, the route is clear.

Muralidhar Rao
murali772's picture

what are we waiting for?

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The disruptions are happening even as minutes of Bescom meetings in February claimed that "all regular maintenance works are being done now, so that after March, there won't be any long outage due to maintenance works, except in sudden cases of technical fault".

Lightning and light showers on Friday night tripped Hoodi power station, resulting in vast swathes of areas in Koramangala, HSR Layout, Bellandur, Marathahalli, Mahadevapura, Ulsoor and parts of Indiranagar plunge into darkness. Residents of Ulsoor and Koramangala complained that they did not have electricity throughout Friday night and normalcy was restored only by Saturday morning. Peenya, Yeswantpur, Jalahalli and Dasarahalli residents also have been complaining of unscheduled power cuts.


For the full report in the ToI, click here.

When I checked with my daughter, who has been living in Mumbai for the past year and a half now, she says "power interruption" is very rare there. She can think of only once when it happened, following a thunder storm, in the midst of the monsoon period. It was restored pretty fast too. The only other time was a few hours' maintenance shut down, which was notified well in advance, and which became a major event in the area, since hardly any buildings, residential or commercial, have back up power.

As compared to that, in Namma Bengaluru, the rarity is if a building doesn't have a back up. Admittedly, things have improved tremendously since Mr Manivannan took charge as the BESCOM MD. But, to reach Mumbai supply quality levels, there is a long long way to go. Mr Manivannan can certainly do it, and do it better even. But, his constraints are funds (read here what he himself had said almost two years back). And, the only way out of that is what Sheila Dikshit has done In Delhi - privatised distrubution (check this).

What are we waiting for?

Muralidhar Rao
murali772's picture

where's the money going to come from?

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Speaking about the challenges faced by BESCOM, its Chief General Manager Ananda Naik said, “The infrastructure is old and has to be improved. There must also be 100 per cent redundancy, but both these will cost a lot of money and face issues like Right of Way.”

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

The critical question is where is the money going to come from, with BESCOM being perennially broke, financial indiscipline being the order in this sector (check this). Privatisation of distribution is the only answer.

Muralidhar Rao
murali772's picture

Can he be more explicit than that?

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Manivannan demonstrated through a game, that without incentive, government staff maintain status quo and only try to get through the day. “This is how the system itself is designed,” he said, adding that private entities work on a system of reward and penalty and are therefore more efficient.

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

And, Delhi has shown you the way - here.

Muralidhar Rao
murali772's picture

Sins and the public sector

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Chairman of the Karnataka Electricity Regulatory Commission (KERC) Sreenivasa Murthy on Friday urged electricity supply companies (ESCOMS) to interact regularly with their customers in order to prosper.

At a workshop on ‘electricity tariff determination’ held in the city by the Consumer Rights, Education and Awareness Trust, Murthy said that while “it is not a sin to be a public sector organisation’’, it is, if the organisation does not care for its consumers. A ‘take it or leave it’ attitude will not help ESCOMS to survive for long, he said. At the workshop, two research papers titled ‘Civil Society Participation in Electricity Governance’ and ‘Power supply in Bengaluru -  Facts and Gaps’ were also released. The papers investigate the source, planning, demand and shortfalls of power supply.

Murthy also urged electricity consumers to familiarise themselves with the basic process of problem resolution. “Customers should know the functioning of the utility and their rights. They must know whom to contact in case of a problem and must take part in regular consumer interaction meetings,” he said.


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

Consumers have better things to do in life than go on participating in meetings with utilities and service providers. It is the job of a utility to provide the service that it has been entrusted with, diligently, and it is the job of the regulator (KERC) to ensure that. That's what they are all being paid for by the consumer. And, that's largely the case in Mumbai, Kolkata, Ahmedabad, Greater Noida, etc, and Delhi of recent (check this), in all of which places the utilities are run by private players.

It's in Bengaluru and other cities and towns (as also in villages) in Karnataka that the consumers remain at the mercy of the poor quality supplies by government-run utilities, and have to keep running after them to get them rectified. So, is there a sin being committed? If so, by whom?

When the solutions are as simple and staright-forward as that, questions need to be raised as to the need for all these so-called research papers, as also the funding for them. Perhaps, these are how sins get piled on.

Muralidhar Rao
murali772's picture

more futile research exercises

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I recently learnt about an initiative, launched a few years ago, by WRI (World Resources Institute) along with Prayas (Pune), which has been acclaimed to have led to many notable changes in the Electricity sector. Talking to an expert on the subject, at a recent workshop, I however learnt that he was largely unaware of the transformation that had taken place in Delhi, particularly in the areas covered by Tata PDDL (check here), where losses have been brought down from the earlier 55% odd to less than 15% today, resulting in 99.9% system reliability, and at comparable tariff levels as say in Bangalore (for some 60% system reliability). Even the bit, he knew, he chose to underplay. As far as I can see, this is like ignoring the elephant in the room. If the approach is going to be such, I wonder what good the studies can do.

I don't doubt the sincerety of the people involved in these exercises. But, I feel they all are still afraid of being seen as "politically incorrect" if they even suggest privatisation/ outsourcing, in spite of India having given up on Nehruvian Socialism long ago, and these being largely youngsters. Perhaps, they could do some introspection, using this tool.

I am not for a moment saying that privatisation is the panacea to all of the problems afflicting the sector. But, it certainly takes care of a majority of the issues. The rest can then easily be tackled by the regulatory bodies, perhaps with inputs from the think-tanks like WRI, Prayas, etc. But, by ignoring this big ticket solution, the think-tanks are essentially lending themselves to get co-opted by the government mafia-like set-ups.

 

Muralidhar Rao
murali772's picture

PSU's and financial indiscipline

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When I brought up the matter of Delhi's improved power supply, at a public platform recently, some body in the audience responded with "when Mr Manivannan became the BESCOM MD, the operations had become smooth", in effect trying to convey the message that if you have the right person at the top, PSU's also can run smoothly. Yes, BESCOM's day-to-day operations had indeed become smoother then, and the effect of that continues even today, at least to some extent. But, with government perennially delaying release of subsidy (for supply to farmers) in thousands of crores and for months on end, BESCOM was forever broke, leading to Mr Manivannan having to resort to all kinds of financial juggleries just to keep the show going. As such, the question of system upgradation/ improvement never arose at all, that in turn leading to its own set of serious problems. That's more or less what he stated in his address to the FKCCI (check my post of 18/07/2011, scrolling up).

As compared to that, when the Reliance companies in Delhi threatened to cut off power supply, saying that the tariff levels allowed by DERC would prolong the clearance of the regulatory dues (of close to Rs 15,000 cr) to them, making it difficult for them to meet their dues to NTPC, not only did the DERC raise the tariff by 8%, but, of all people, Sri Arvind Kejriwal (as the CM of Delhi) wrote out a cheque in their favour for Rs 323 cr from out of the funds meant for the Municipal Corporation of Delhi, all in a matter of a month (check the ToI report here). Initially, of course, he resorted to some sabre rattling threatening to terminate the licenses of the Reliance companies. But, when the realities were placed before him, he had no option other than to face up to the task on hand, or incurr the wrath of Delhi-ites.

Similar is the scenario when KPTCL is required to buy power from private generating companies like Udupi Power Corpn, Jindal, GMR, etc (check my post of 2/06/10, scrolling up).

And, in stark contrast is how KPTCL treats its main source, viz the government-owned (but, generally well-run) KPCL (check here), which is paid on an average in 13.5 months. It's a miracle KPCL still survives.

Moral of the story - financial discipline in government organisations/ PSU's is a difficult (nay, impossible) ask, with the rare exceptions, of course.

Remedy - Follow the Delhi model and privatise distribution (check this).

Muralidhar Rao
murali772's picture

looking for the panacea

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An assistant manager with a private hospital sustained serious injuries while two others escaped with minor burns after a transformer installed near the BMTC depot in Koramangala IV block exploded on Saturday evening.

For the full report in the ToI, click here.

As the MD of BESCOM, Mr Manivannan had elaborated on the funds crunch that he was faced with on a perpetual basis (scroll above to my post of 18th July, 2011), with the government holding up farmer subsidy of thousands of crores for months on end, apart from the inadequate tariff increases allowed by the KERC (pandering as they are to the pseudo-socialist consumer lobbies), cornering him into a situation where he was hardly able to carry on day to day operations, leave alone any upgradation, modernisation, or expansion. The situation has only worsened since then. Mishaps as reported above are clearly a manifestation of the resulting malaise in the system.

Even as that's the scenario in Bengaluru, "privatisation" of power supply in Delhi has led system reliability improving to 99.9%, alongwith corresponding improvements of all the other relevant parameters too, and at tariff levels comparable to those charged by BESCOM (check here).

For all of that, the doubting Thomases still like to say that "privatisation may not be the panacea". To them, I would like to say "let us first achieve that level of reliability, and then look beyond for the panacea, whatever anybody's idea of that may be".

Muralidhar Rao
murali772's picture

meaningless exercise

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On Monday, the Karnataka Electricity Regulatory Commission (KERC) will begin public hearings related to the tariff revision petitions filed by various Electricity Supply Companies (ESCOM). The entire process is expected to take 10 days after which the KERC will announce a tariff order sometime next month.

This year, ESCOMs are seeking a 66 paise hike in tariffs. In its previous order, the KERC had hiked rates by an average of 20 paise for domestic consumers last year when the ESCOMs had asked for a 70 paise hike. This year, according to officials, more than 2,700 objections have been received from members of the public against the tariff revision petition.


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

Of the 2700 'objectors', I expect, over 99% will be from RWA's and some Civil Society organisations, who have no idea of the difference between a kw and a kwh. Their objections will be largely based on some generalities.

Now, if you open the KERC website, under "reform efforts", sub-para "preamble", you will notice that the government had committed to 'privatisation of distribution', as far back as in 1997. It reiterated the intent a few years down the line too. But, nothing has happened since then, even though the main reasons for adopting the stance have only got buttressed further. Now, besides, you have the excellent model before us of Delhi (check here), where privatisation, over the past 9 odd years of the Sheela Dikshit government, has made a world of difference to all the stake-holders involved. As such, do the rest of the 'knowledgeable objectors' want to ask the KERC as to when it is going to press the government to move on privatisation?

Also, even if there have been the tariff increases, because of the 99.9% system reliability, leading to lower dependence on standby equipment, the net costs have come down hugely. And, for all of that, the tariff levels are still comparable to what is charged by BESCOM (for the far lower system reliability).

Apart from all of these, tariff increases are inevitable with input cost increases. Keeping a check on them is a highly technical job. It's best left to be done by the KERC, where the knowledgeable objectors (and may be a few of the not-so-knowledgeable ones too) can perhaps be represented (and, not just for raising objections). These 2700 objections are essentially a lobby exercise - best given up.
 

Muralidhar Rao
murali772's picture

So, what's anybody waiting for now?

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Shouldn't we get a move on then? A PIL?

 

Muralidhar Rao
murali772's picture

Cock & bull stories

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In a surprise move, the State government has told the High Court that it is revoking its order dated March 26, 2014—which mandated private players to sell all the power generated by them only to the State grid—as the “emergency” has ceased to exist and there is “surplus plus” power in Karnataka.

The government had issued the order under Section 11 of the Electricity Act, 2003, saying there was power shortage in Karnataka and hence private co-generation units (sugar companies) and other players must sell the entire power generated by them only to the State grid.


For the full text of the report in the Deccan Herald, click here

"Karnataka a surplus power state" now - does anybody want to believe that?

So, what is my friend Mr Sanjay V talking about when he makes the following post on Facebook:

BESCOM is at it again. No power since 3:30pm. This ordeal started April 21st. Very, very disappointed. Time to push the government out of the electricity supply business. Some excuse everyday from 22,23,25 and 26 were for some KPTCL transformer change. Since then there is some reason everyday. Long cuts, or multiple cuts in a day. I have logged multiple complaints on 22873333. Tired of doing it and the call center execs are embarrassed. If there is major system change, Bescom owes it's consumers an explanation. Food goes bad in the fridge. Chores cannot be done. As a large apartment, we have to buy diesel to at least keep STP and lifts running. I went to a nearby house in AECS layout. They were doing some renovation work in their house and lack of power killed it. Everybody is prepared for some power cuts. But what we are facing is not power cut. Power going off 4 times a day for 2 hours each or 6-7 hours at one go is not power cut in Urban India. Rural is a different nightmare.

Perhaps, the problem then is not with the power availability, but with the distribution system. Yes, indeed there is a very serious problem there of funds crunch, as repeatedly brought up by the erstwhile MD, Mr Manivannan, as also the Chief General Manager, Mr Ananda Naik (not sure if he is still holding the post), largely on account of "uncleared power subsidy to farmers to the tune of Rs 4,000 cr (read my post of 28th July, '10, by scrolling above - the situation remains more or less the same today too)", apart from non-payment of bills by other government organisations. So much so, the ESCOMS are hard put to carry on their day to day maintenance, leave alone upgradation, modernisation or expansion.

What Sanjay V has stated on Facebook is a clear manifestation of this. The answer to this plainly is good financial discipline, which cannot be practiced in government organisations, due to political considerations, but which private operators have shown themselves eminently capable of (check my post of 27th March, scrolling above, how Delhi private players are managing it). The imperatives of privatisation of distribution thus get further substantiated, if anyone is not convinced yet.

The Karnataka government had earlier invoked Section 11 to force the IPP's in the state to supply power to KPTCL because of the incapacity of the prime supplier, viz KPCL, which situation was brought about by the government itself - largely because of non-payment of dues (check my post of 2nd June,'10, scrolling above, for more on that). The payment terms being unsatisfactory, the IPP's, very correctly, challenged the order in the court.

Now, it's not as if KPCL's position is any better today, the dues to it from KPTCL being as huge as ever, and, consequently, the "power surplus" statement by the government is a plain bluff. The difference today is that you have an "industry-friendly" power minister, who is OK with generation companies like Udupi Power mucking up the environment in verdant South Canara to supply power to industrial consumers outside the state, even as Sanjay's in Bangalore (and worse, even the ones in Udupi) are told all kinds of cock & bull stories.

The minister had apparently been friendly to Sanjay too till after he had cast his vote. Now, perhaps it's time to recoup the election expenses.


 

Muralidhar Rao
amithpallavoor's picture

Waste to Power

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The idea of waste to power is being explored by BBMP for the first time at Nelamangala. I would like to see if this makes any headway or this just an eyewash like the garbage processing centre at HSR layout.

murali772's picture

KERC's scapegoat

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Citing an increase in the cost of service for ESCOMS at Rs 2,231 crore for providing power in 2012-13, KERC noted that KPCL was a ‘major contributor’ to a shortfall in procurement of 6,908 Million Units which the utilities then had to buy on the short term market at a cost of 4.64 Rs/unit as against the rate of 1.94 Rs/unit that KPCL supplies power at. This coupled with a low revenue realisation of 19 paise per unit led to a gap of Rs 2,377 crore, KERC has estimated and a part of which has been incorporated in Monday’s hike.

For the full text of the report in the New Indian Express, click here. And, following are the excerpts from another article in the same daily on the same day (for the full text of that, click here)

The subsidy the government will have to pay to cover the cost of power supply to irrigation pump sets and other consumers has increased to Rs 6,308 crore for 2014-15. An additional subsidy of `965 crore will be given to the Escoms for extra power supplied in 2012-13,” Murthy (KERC Chairman) said.

"Revenue realisation of 19 paise per unit" translates to 4.25%, assuming average billing rate is Rs 4 per unit. This means that if BESCOM's gross annual billing is Rs 10,000 cr, it is realising just Rs 425 cr, the rest of it going to cover the losses, apart from adding to the already whopping figure of Rs 6,308 cr subsidy dues from the government, as also the corresponding dues figures pertaining to other government organisations. This in turn has meant the debtors-days (no of days taken for realising your dues) figure for KPCL, the main source for all the state ESCOMS, mounting to 402 (13 and a half months), even as of 09-10 (check here), which will soon be touching 2 years, going by the way things have deteriorated steadily thereafter. In such a scenario, it's miracle that KPCL is even operating, and not closed down yet.

There is no escaping from this kind of a financial indiscipline, and the disastrous cascading effect thereof on the entire sector as also the economy, as long as the operations, particularly distribution, remain with the PSU's. A glimpse of how the private sector does it differently can be seen by a reading of my post of the 27th March (scroll up).

The KERC Chairman's making KPCL a scapegoat to pin the blame on, is a pathetic effort at transferring the blame from the government, where though it squarely rests, since apparently he can't afford to displease the powers that be that appointed him to the post.

Muralidhar Rao
murali772's picture

Call Centre and say what?

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Electricity consumers drawing power from ESCOMs across the State will soon have a centralised call centre to log their complaints and intimate them of the action taken. BESCOM has already implemented this for all the eight districts under its jurisdiction.

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

And, here's what my good friend, Sanjay V, had to say about his experience with calling the call centres (scroll up to my post of the 3rd May)

Since then there is some reason everyday. Long cuts, or multiple cuts in a day. I have logged multiple complaints on 22873333. Tired of doing it and the call center execs are embarrassed.

What purpose do these call centres serve?

Muralidhar Rao
murali772's picture

A corollary

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The Supreme Court has told India's top power producer that it can cut supplies to an electricity distributor in New Delhi if it is not paid arrears by end-May, intensifying a dispute that could lead to blackouts in the capital. The court on Tuesday ordered BSES — part of billionaire Anil Ambani's Reliance Infrastructure Ltd — to pay state-run NTPC the 7 billion rupees ($116 million) it is owed by May 31. If BSES fails to pay by the end of May, the court said NTPC is entitled to cut the power it supplies to the distributor, overturning an earlier court order that NTPC should keep power flowing despite the outstanding bill.

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

While that's the case in Delhi, BESCOM and its sister ESCOMS put together were paying its main supplier, viz government-owned KPCL, in 402 days on an average (ie almost 13 and a half months later), against the Rs 417 cr that it billed on an average every month (09-10 figures). The best debtor was BESCOM paying in almost 4 months, and the worst was GESCOM paying in 20 odd months. The gross debtor-days figure worsened from 295 in 07-08 to 339 in 08-09 to 402 in 09-10 (see my 1st post of 1st June,'10 - scroll up). I expect it will be far worse today, what with the dole-raaj let loose by the current regime.

Under the circumstances, what is surprising is that KPCL is even surviving, leave alone the question of meeting the state's demand. For all of that, the irony is that the KERC has chosen to find fault with KPCL (see my 1st post of 15th May - scroll up).

This bit about "overturning an earlier court order that NTPC should keep power flowing despite the outstanding bill" is quite significant. The earlier order was possibly passed when the government-run DESU was in charge of distribution. Very obviously, the courts too were being politically correct, and showed reluctance to punish the government-run utility. But, when the function has switched to private hands, apparently there is no longer the "political correctness" consideration, and they are happy to help enforce the contract terms, and thereby bring about the much needed financial discipline in the sector. This I would then add as another major reason why privatisation (particularly of distribution) should happen right away.

And, that's the only way to save an otherwise well run KPCL, since, totally unmindful of its plight, namma Energy Minister, Sri D K Shivakumar-avaru, is going about signing fresh MoU's for power purchases, going by this report in the New Indian Express. What sanctity can these Mou's have?

Muralidhar Rao
murali772's picture

how long will the minister carry on the bluff?

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Lanco Infratech's 1,200 MW Udupi electricity plant in Karnataka has been shut down due to non- availability of coal, while the state government put the blame on the company and said it would manage the power situation.

While a company spokesperson declined to comment on the matter, sources said the project, fired by imported coal and an important source of electricity for the state, has been facing financial difficulties due to outstanding payments for power supplied to Karnataka.

When contacted, Karnataka Energy Minister D K Shivakumar told PTI that all bills have been paid to the firm and that the state had even given Rs 300 crore in advance.

"They are trying to blackmail us... No individual power producer can blackmail the Karnataka government... We are an investor friendly government," the Minister said.

"We will manage the (power) situation and have the alternative... and (this time) we are having good rain," he said.


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

If the monsoons fail (as has been forecast), and our reservoirs don't collect enough water, the minister's bluff will get called, and he'll inevitably have to go back to Udupi Power company with a begging bowl, since, the state's other mainstay, KPCL (largely the thermal power plants in Raichur), has been almost run to the ground by the government due to non-payment of far larger quantum of dues. All in all, a total mess, and the approach of the minister is only going to worsen the situation further.

Muralidhar Rao
murali772's picture

eye-opener

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The high court on Thursday ordered notice to BBMP and the Karnataka Electricity Regulatory Commission (KERC) after a family filed a petition seeking Rs 29 crore-plus compensation from Bescom for the death of its sole breadwinner.

Observing that the case on hand is an 'eye-opener' , Justice Ram Mohan Reddy wanted to know why the Bescom couldn't do away with these transformers. One such faulty transformer was allegedly responsible for the death of Manoj Kumar Vasanthrao Patil, vice-president , Sundaram Auto Components, Hosur.

"The right of pedestrians is in peril because of these transformers. Can you not put an end to this pernicious practice ? Recently, I was in Paris for about a week. There I couldn't see a single transformer in any of the gallis (street corner). Why can't you adopt the same here?" the judge asked.

Bescom's counsel said the agency has taken many initiatives and will place them before the court by the next date of hearing.


For the full report in the ToI, click here.

Very much, as Justice Reddy has said, transformers and allied electrical equipment, are installed underground in most modern cities. Examples of various types of installations are accessible here. But, the problem is the much higher cost, and, with BESCOM being forever broke, due to large uncleared farm subsidy dues from government, it is hard put to carry on normal day-to-day operations even, leave alone the question of modernisation.

Now, even if installed above ground (as in Bangalore), as long as the equipment are of good quality, installed properly, and maintained well, they should not generally pose any serious problems. But, that's where the bigger problem lies. Very much like most other monopoly government set-ups, BESCOM too is lax on these matters, and you have incidents like the one the court is now seized of. And, being a government set-up, from which maamools (not necessarily small, as the term implies) cannot be extracted, the Electrical Inspectorate doesn't bother with the periodical inspections, which they carry out diligently in the case of private installations.

And, these are not isolated incidents. There was a similar mishap in mid-April in Koramangala - check my post of 14th April, scrolling above. And, it can happen again, anytime, and you and I can be the victims too.

Very plainly, government set-ups are no longer in a position to discharge these functions in today's world. It's high time they are all privatised.  Justice Reddy has talked about the case being an "eye-opener". One hopes the vision too becomes clear with the opening of the eye.

Muralidhar Rao
murali772's picture

Haven't we heard this before?

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Energy minister D K Shivakumar on Tuesday said the government would be taking a second look at the subsidised power scheme meant for farmers in the State.

Responding to a series of questions posed at the Legislative Council on free power being given to farmers for irrigation pump sets, Shivakumar said the government is diverting no less than 39 per cent power produced in the State towards farmers every year. “We have to sit and analyse how much of this power, being given to farmers, is indeed reaching those who require them the most. - - - Further, we have to also see how much this is hurting the government if it is to continue the scheme,” he told the House.

The annual power subsidy burden on the State government now touches a whopping Rs 7,400 crore.

For the full text of the report in the Deccan Herald, click here.

I don't think this government is capable of biting the bullet in this matter. Meanwhile, the entire energy sector in the state, led by its main generation company, KPCL, is on the verge of collapse.

Muralidhar Rao
murali772's picture

Ostrich syndrome

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The following are the excerpts from today's front page ToI news (in italics - for the full text, click here), and my response to them:

Karnataka is heading towards a grave energy crisis. Bangalore is likely to bear the brunt of it. A weak monsoon and widening supply-demand gap have raised the spectre of prolonged power cuts.

- - - The government's efforts to mitigate the situation are going nowhere. "To meet the demand, we have signed an agreement, both short- and medium-term, to purchase 2,000 MW of power. But due to corridor problems, we are now getting only 600 MW daily,'' the minister said.


Signing an agreement is one thing, and honouring it is another. Calling private generation companies 'blackmailers' (see my post of 17th June, scrolling above), when they cut off supplies due to non-payment, may appeal to the motley groups of pseudo-socialists that remain in the country. But, it's not going to get the minister, or his party anywhere. The next elections, whether of the city or the state, will make that fairly clear, particularly when many of the other states (more specifically, Gujarat) have addressed the key issue of "power subsidy to the farming sector" head-on, and the rest are poised to follow suit, even as Karnataka chooses to keep its head buried under the sand.

- - - According to Shivakumar, the reasons for the impending crisis are many: diversity in demand and supply; gap in the installed capacity and realization; transmission and distribution losses; over-dependence on hydel power; and theft. The loss, including transmission and distribution, is 19.75%.

He refuses to talk about the key problem of "power subsidy to the farming sector", which is what I meant when I stated "keep its head buried under the sand". And, as long as this approach continues, there's little hope for the state other than through throwing out this government at the next elections.

Karnataka's installed capacity from all sources, including the Centre's share, is 14,329 MW. The state produces 6,390 MW from hydel, thermal, solar and wind sources. Of this, the share of hydel energy is 3,652 MW.

The question is how much of it is available to you, when you can't gear yourselves up to pay up the bills.

- - - The minister said the situation would improve a lot once the 700-MW Bellary Thermal Power Station Unit-3 and the 1,600-MW Yarmarus project are completed this financial year.

A large part of the huge Raichur Thermal power plant capacity is currently idling for want of money to buy coal, as well as to carry out regular maintenance. So, even if these new plants are commissioned, using project funds, within months, they too will suffer the same fate as the older units.

Muralidhar Rao
murali772's picture

can we afford these huge costs any longer?

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Constant interruption in power supply also increases maintenance costs of all utility equipment and power installations. "Our hospital is also being supported by DG which backs up immediately on full working load of the hospital in less than 45 seconds. As a corporate hospital, we cannot afford our services to be affected due to power shutdown, so we constantly upgrade our power backup systems," said Pramod Alagharu, Unit Head Operations, Manipal Hospital.

Hospitals today go in for three layered power supply. Sakra World Hospital has commissioned two independent electrical power feeder lines with ancillary system backup from two sources. It has a third electrical source in DG sets to make sure that the temperature does not vary. The uncertainty has also forced hospitals to maintain enough fuel stocks.

Dr Umapathy Panyala, CEO, Apollo Hospitals, says that at any given point of time his hospital has approximately 6,000 litres of diesel, and this would last for about 72 hours.


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

This is not the case in hospitals alone (though here it could be a matter of life and death), but in every establishment. And, it is eventually the consumer - you and me - who bears the colossal cost.

How long do we have to suffer this even as the solutions are staring us in the face?
 

Muralidhar Rao
milindsmart's picture

this looks bleak

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I have been reading all about the power sector for a few days now, as I intend to enter it soon.... the situation looks pretty bad. I never expected such able people as Manivannan, still with hands tied due to rural subsidies and non-payment by government buildings...

I always thought Bengaluru as a city can do FAR better... With such massive problems, the fact that they are still doing a decent job for a major part of the city shows how capable they can be.

I have read a lot of your posts, Murali... Your information is in-depth and precise.

What's the current situation with BESCOM? I know of a rather large debt restructuring program R-APDRP.. Has that yielded any results?

And finally, what's the lowest hanging fruit we can attack, as citizens?

I'm an electrical engineer, and I'd feel pretty bad if I could not help my city's power supply in some small way.

murali772's picture

no low hanging fruits

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Welcome to Praja, Milindsmart.

I don't know if you have read my biodata. It's accessible here. If you read it, you'll understand where all the "gyan" comes from :)))

And, I will say with certainty that there are no low hanging fruits, harvesting of which can solve the problems on hand. The only way out is privatisation of distribution in cities to begin with, perhaps on the lines of what Delhi has done recently (check here), followed by Gujarat, or our own Hukeri Co-op Society model reforms for the rural areas.

Well, amongst my various campaigns targeted at that objective, I am planning to start an online petition soon, which none less than Mr Mohandas Pai and Mr Manivannan have agreed to endorse. May be you could help collect more endorsements too.

And, thereafter, let's see where it takes us all.

 

Muralidhar Rao
murali772's picture

Doesn't the CM understand that the responsibility lies with him?

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Reproduced below are excerpts from a report in the New Indian Express (in italics), and my response to them. For the full text of the report, click here.

Today, subsidy for farmers and other schemes in the electricity sector, which was Rs 1,800 crore in 2004-05, has reached around Rs 6,200 crore. There has been no energy audit till now and we need to know where the generated power is going,” he (the CM) said.

What is the point just mouthing this, and not doing anything about it, Sir?

Siddaramaiah also cautioned KPCL staff to pull up their socks and work towards ensuring all current projects functioned at maximum efficiency. - - - - Shivakumar also brought up the topic of dues owed to the generation company and said, "The dues have reached around Rs 12,000 crore  today. There are many bodies like ESCOMS, zilla and gram panchayats who owe KPCL money. If this money does not come in, how will we fund more projects? This has to be fixed,” he said.

When the dues mount to nearly twice the turnover, because of the government's doings, with what conviction can you caution the KPCL staff, Mr CM?

Muralidhar Rao
murali772's picture

Piyush Goyal has his job cut out

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The industry has racked up bank debts of 5 trillion rupees ($84 billion), according to central bank figures. Debts owed by distributors totalled $18 billion in 2012, the year of the last rescue. Coal India's receivables are $1.4 billion. Worse, the World Bank estimates that annual losses in the Indian power sector could rise to $27 billion by 2017 without action to tackle wasteful subsidies, power theft and political meddling.
 
For the full text of the report in YahooNews, click here.
 
Lack of financial discipline, leading out of the mis-handling of the revenue collection function by the government controlled distribution companies is very clearly where the problem lies. And, the simple answer is privatisation of the function, in cities to begin with, where Delhi has given an excellent lead (check this).
 
All of Modi government's efforts at reviving the economy will come to nought if this important aspect is not taken care of. As such, as the Energy Minister, Mr Piyush Goyal has his job indeed quite well cut out.
 
Muralidhar Rao
murali772's picture

Another life lost to Katiyabaazi

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A live wire dangling from a streetlight pole claimed the life of a seven-year-old girl (Anandi) in Kalasipalya, west Banaglore, on Wednesday night. - - - Anandi's mother Jayanti told TOI that they had twice complained to Bescom on the dangling wire. "The first complaint was lodged in the last week of August and the second complaint was lodged on September 15. No one from Bescom visited the spot. I hold Bescom officials responsible for my daughter's death," she said. - - - - Kalasipalyam police have booked a case of negligence. "After preliminary investigations, we will decide whether to make Bescom a party," he said. 
 
For the full text of the report in the ToI, click here.
 
The "Katiyabaazi" (check here) work culture, that is responsible for such mishaps occuring repeatedly, is too deeply ingrained in our government-owned "dis"-service providers that no candle-light vigil, no police action, no Manivannan-like officials can ever hope to change it. The only answer is privatisation, quite like Delhi has shown the way recently (check here). The important question is will the Civil Society, and the so-called new age political parties, ever wake up to this reality?
 
Muralidhar Rao
murali772's picture

milking the power sector

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We are spending Rs 7,000 crore on free electricity to farmers. We are aware of the problems faced by farmers but where do we supply power from? We need the plant".
 
That was the quote (from a recent New Indian Express report - for the full text, click here) by Power Minister D K Shivakumar, reacting to opposition from a section of locals to the Rs 15,000 cr ultra-mega thermal power plant proposed to be set up in Kudgi in Bijapur district.
 
Now, while setting up a power plant in largely arid (and consequently less densely populated) Bijapur district may not be such a bad idea, setting up an equally big (4000 MW) at Niddodi near Moodbidri (for the full text of the ToI report pertaining to the opposition from the locals here, click here) in the midst of the verdant Western Ghats, is plainly disastrous, even as the the lower capacity UPCL plant at Nandikur nearby, was in itself bad enough. 
 
The fact of the matter besides all of these is that the problem lies largely with distribution, resulting out of the government owing the ESCOMs close to Rs 6200 cr against farmer subsidy alone any given day, apart from other government agencies, municipalities, etc paying them when able, if paying at all. Not only has this led to their being hard put to carry on even day-to-day maintenance of their systems (forget expansion, upgradation, etc), but in addition their owing a colossal Rs 12,000 cr collectively as of now to the state-owned KPCL, the state's mainstay in power generation. And, if not for this extremely harsh deprival of its dues, KPCL by itself could have met a large part of the current power demands of thre state, besides gearing up to meet the future needs too, obviating even the need for much of the costly capacity addition that is being talked of now.
 
But, by neta's reckonings, projects are where the money is; and the bigger they are, the bigger the money. And, the government ownership of the ESCOMs suits this game of theirs perfectly. As such, unless that changes, there's no redemption for the state's power sector. 
Muralidhar Rao
murali772's picture

Smart Power for Smart Bengaluru

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Imperatives for Smart Power for Smart Bengaluru - My open letter to the CM on the subject, published in Citizen Matters, is accessible on the link below:
 
 
Muralidhar Rao
kbsyed61's picture

Joint Symposium with BCIC/KFCC!

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Murali Sir,

It would be interesting to see if BCIC/FKCC would agree to host a Symposium on this subject. 

-Syed

murali772's picture

Lot of nataka; little substance

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An e-tendering process for solar projects worth Rs 2,100 crore, called by the state government, has opened a can of worms. Many applicants allege that the process was rigged. They claim all allocations were booked in less than 40 seconds of the online process starting. But energy minister DK Shivakumar has dismissed it as a case of sour grapes by those who couldn't apply , saying the entire process was transparent.
 
For the full text of the report in the ToI, click here.
 
The whole idea of e-tendering was apparently to prevent rigging. Now, it looks like those bent on rigging will have their way either way, particularly when you have a neta, best known for all the wrong reasons, sitting on top of you. 
 
And, we are now being told that "HudHud", which made its land-fall in far away Visakhaptanam and whose activity was charted very well in advance by the Met department, is going to be causing "two-hour load shedding in Bangalore city and three hours in the rural areas with immediate effect and for an indefinite period", going by this ToI report. This line - the minister said the government plans to procure 500 MW from private companies to meet the demand - towards the end of the report, may give an indication of what may be cooking. 
 
All in all, there's very little that's right about the sector in Namma Kar-nataka.
 
Muralidhar Rao
murali772's picture

Financial indiscipline of the worst order

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Energy Minister D K Shivakumar on Monday handed over a cheque for Rs 34.06 crore to Chief Minister Siddaramaiah as dividend for 2013-14 from Karnataka Power Corporation Limited (KPCL). The Chief Minister is also the chairman of the generation utility of KPCL.
 
According to officials, the amount was handed over as KPCL made a profit of Rs 970 crore in the last financial year with the sale of 28,712 million units of power. When compared to the previous year, it recorded an increase of 4,330 million units sale. This is the 11th consecutive year that KPCL paid the dividend, officials said.
 
In the previous year, Rs 31.27 crore dividend paid. KPCL is the only state-owned generator for Karnataka and has about 6,500 MW generation capacity. Nonetheless, the company had attracted criticism for low power generation owing to old infrastructure at some stations and frequent glitches with others. 
 
For the full text of the report in the New Indian Express, click here.
 
Just in July this year, the minister was quoted (by the New Indian Express - click here to see the report) saying as below:
 
Shivakumar also brought up the topic of dues owed to the generation company and said, "The dues have reached around Rs 12,000 crore  today. There are many bodies like ESCOMS, zilla and gram panchayats who owe KPCL money".
 
So, even as KPCL is declaring decent profits, on which it is made to pay dividends to its sole owner, viz the government of Karnataka, the same government just can't bother to have the whopping Rs 12,000 cr owing to it, by the government's own organisations, cleared. Can there be a worse case of financial indiscipline?
 
Muralidhar Rao
murali772's picture

need is more for financial prudence

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The Centre has prepared a detailed roadmap in consultation with states to make India “diesel generator and inverter free” in the next five years, and fulfill the Narendra Modi government’s promise to provide 24x7 power to every home, factory and farm and put the country back on the high-growth trajectory.
 
- - - -“Development of power generation sector alone cannot ensure 24x7 power supply without matching development of transmission and distribution (T&D) sectors,” a government official said. “For this involvement of the states is vital... states were urged to develop the T&D in partnership mode to keep pace with power generation.
 
- - - - Losses in transmission are the bane of the power sector in India. Up to 40% of power generated is lost in distribution. State-specific measures agreed at the meeting included bringing down transmission and distribution losses to 15% at the national level. Targets have been set for each state to bring down T&D losses, and over-achievement would be rewarded, the official said.
 
- - - - World Bank help has been sought for a state-wise turnaround plan for the key states that together account for about 80% of the country’s $20 billion (Rs 1.2 lakh crore) annual power distribution losses.
 
- - - - India’s total installed power generation capacity in all modes stands at 250,000 MW. Of this, only about 140,000 MW is actually available because of coal and gas shortages and sub-optimal capacity utilisation.
 
For the full text of the report in the Hindustan Times, click here
 
More than containing T & D losses (where states like Karnataka "claim" to have made great progress), is the need to usher in a culture of financial prudence, rather discipline, in the sector.
 
Can you imagine a scenario where the government-owned Karnataka Power Corporation Ltd (KPCL) is made to release a cheque for Rs 34.06 cr to the government, towards dividends (on a profit of Rs 970 cr), even as, between the state-owned ESCOMs and other organisations, over Rs 12,000 cr (a figure well above its annual turnover) is owed to KPCL, leaving it hard put to carry on even its day-to-day maintenance?
 
That's the level to which things have regressed in "progressive" Karnataka. You can then very well imagine what it's like in the "backward" states. It's plain anarchy. And, mind you, the required discipline will not come about as long as the distribution function remains in the hands of government-run utilities.
 
Mr Piyush Goyal would thus be doing a great dis-service to his countrymen if he talks World Bank and other financial institutions into making funds available to state governments without their committing to privatisation of distribution in cities, and to adopting a more viable model than the present one for rural supplies. 
Muralidhar Rao
murali772's picture

What the officials can't tell, and the neta's won't tell

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Rural areas in the state face severe power cuts over the next few days as coal shortage has forced two major thermal power units to shut down since Tuesday. While the situation is expected to improve, rural areas may have to go without power for an additional two hours everyday. On Wednesday, one 210 MW unit of the Raichur Thermal Power Station was down for annual maintenance. In addition, a 500 MW unit of the Bellary Thermal Power Station (BTPS) and a 600 MW unit of the Udupi Power Corporation Limited (UPCL) were shut down due to coal shortage. - - - We had to resort to load shedding for two to three hours in rural areas, and one hour in urban centres. However, Bangalore did not have load shedding,” said BESCOM MD Pankaj Kumar Pandey.
 
For the full text of the report in the New Indian Express, click here.
 
What the officials can't tell, and the neta's won't tell is the fact that the problem is not as much with the coal supply as with the payment for it. And, there is very little maintenance (annual or day-to-day) happening, because there is no money for carrying it out, and the so-called shut downs are actually breakdowns. The entire sector is crippled for funds. It's a miracle it carries on even.
 
Bangalore has to be kept running somehow, for fear of Chandrababu Naidu pointing out the problem, and attracting investment into his state. Whatever, it's not going to be easy to carry on the bluff for long. 
 
Muralidhar Rao
murali772's picture

The only way to prevent electrocution accidents

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The Electrical Inspectorate carries out the periodical inspection diligently in the case of private installations; but, in the case of BESCOM, they just don't bother to - - - - So, the simple way of ensuring safe installations is to make over the distribution to the private sector, quite like Mumbai, Ahmedabad, Surat, and lately Delhi, have already done. 
 
For the full text of the column in the Deccan Chronicle, click here
 
When I say "diligently", I need to qualify it by saying that they do it, not as much for ensuring safe installations, as for the "mamools" (which are not quite small as the word would suggest) they invariably collect. But, in the process, a large part of the maintenance work also gets done, since, as owners, the private sector lot are quite bothered about the life of the equipment, as also the liability burden they'll have to bear in case of accidents
 
But, for the BESCOM lot (as much as for most governmental set-ups), such considerations don't even cross their minds. And, since the Inspectorate lot can't get any mamools out of the BESCOM lot, they naturally choose to invest their time on what gets then the moolah. Maintenance, life of equipment, lives of electrocution victims, etc be damned.
 
There have been enough fatalities already - check this, as also my posts of 18th Sept, & 18th June (scrolling up), and there are plenty more. And, tomorrow, it could be you or me even
 
PS: And, the most effective way to do away with mamools is through outsourcing of inspection to "chartered engineers", quite like the Department of Industries & Commerce has long been practicing for conformity of installations as the Boilers & Pressure Vessels Act - check here for more on that. 
 
Muralidhar Rao
murali772's picture

B-PAC's submission to the CM

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B-PAC's submission to the CM for "reforms in power sector across Karnataka and Bangalore in particular, by restructuring the sector through private participation" may be accessed here.
 
It supplements a lot of what I have already stated.
 
An interesting observation made out (@ 5a1 on page 7) in addition is of the "The disproportionate energy distribution in Karnataka, with commercial and industrial sectors together drawing less than fully subsidized agricultural sector, is contrary to other states".
 
One hopes the CM takes note and ushers in the badly needed reforms soon.  
 
Muralidhar Rao
murali772's picture

cruel sick joke

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The total subsidy paid by the state government this year towards free supply of electricity to 22.75 lakh irrigation pumpsets and 29 lakh Bhagya Jyothi/Kuteera Jyothi households will be Rs 7,113 crore. Last year, the subsidy paid was Rs 6,308 crore. According to Karnataka Electricity Regulatory Commission (KERC), the estimated consumption by IP sets will be 17,522 million units (MU) and 319 MU by BJ/KJ consumers. Faced with rising subsidy amounts every year, the KERC has made it mandatory this year for Electricity Supply Companies (ESCOMs) to carry out an energy audit failing which 10 per cent of the subsidy amount would be withheld by the government.

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

The talk of holding back 10% of the subsidy amount is nothing but a sick joke, considering the fact that the quantum held back at any given time is already well above 50% of the dues (the figure I readily have, was Rs 3,922.63 crore, for 09-10 - it must be much more now). As a result, the ESCOMS have reached a near bankrupt state, with hardly any funds for day to day maintenance, leave alone expansion or upgradation. So much so, almost everyday, there's a report of an electrocution death, the latest being of a worker when he came into contact with the iron gate of a public toilet (check the report here in the New Indian Express - with his being an "outsider", the story has hardly received any public attention).

And, there's a simple way out - check here. But, the problem for the many Socialists (pseudo's - I'd like to add) is that the likes of TATA's will make money, even if it's after providing a far better, lot safer, and effectively cheaper service, all on a level playing field.

Muralidhar Rao
murali772's picture

Isn't it high time Bengaluru said goodbye to BESCOM?

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Tata Power Company Limited has been named one of the best companies in Energy And Utilities (Electric) by the Ethisphere Institute. - - -The Institute generates scores in five categories: ethics and compliance programme (35 per cent), corporate citizenship and responsibility (20 pc), culture of ethics (20 pc), governance (15 pc) and leadership, innovation and reputation (10 pc).

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

Tata Power Company is the 51% stake-holder in TPDDL, distributing power to approximately one-third of Delhi. The rest of the stake in TPDDL is held by the Govt of Delhi - check here for more

Now, with all of the so many arguments favouring privatisation of power distribution (through this PPP arrangement), why would anyone in Bengaluru still want BESCOM (controlled by the likes of a D K Shivakumar, whose most benevolent promise has been that students studying for exams will be spared power cuts), unless of course they have some vested interests in retaining the status quo, or they are plain pseudo's?

 

Muralidhar Rao
murali772's picture

and now, obfuscation

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The 12-year-old boy who was believed to have died after coming in contact with a live wire, was indeed electrocuted, his postmortem report confirmed. The revelation has proved wrong Bescom's claim that the class VI student died after a fall.
 
For the full text of the report in the ToI, click here.
 
So, now the BESCOM lot are upto obfuscation to cover up for their inefficiencies, incapacities, and total disregard for human life.
 
Like I have stated in my post of 15th Dec '14 (scroll above to read), the only way out for the citizens is to demand that the job be handed over to professional private players, like Delhi has done in recent times, and cities like Mumbai, Ahmedabad, Surat, Kolkata, etc have had from long. 
 
Muralidhar Rao
murali772's picture

harmful every which way

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The second hidden polluter is subsidized urban electricity. Urban power supply is so erratic that diesel gensets are being increasingly used as a back up. These are highly polluting, yet serve an important and rising need. The solution is to ensure 24/7 electricity, making gensets superfluous. Alas, politicians insist on high subsidies that have crippled most state electricity systems, with annual losses of over Rs 60,000 crore and cumulative losses of Rs 300,000 crore. There is an urgent need to check subsidies, along with power theft and transmission losses. Yet, most politicians give top priority to lower prices, regardless of the financial consequences. Today, even when surplus power is available, some states cannot buy it for want of cash. The resulting power shortage increases genset use and pollution. No activist castigates subsidized electricity as a polluter, but it is. India needs empowered independent electricity regulators setting tariffs at levels that ensure solvency and facilitate 24/7 electric supply, ending genset use. Limited subsidies for the poor are feasible.
 
For the full text of the column by S A Aiyer in the SToI, click here.
 
This is such an obvious reason, as also the many others, why the job of power distribution needs to be entrusted to professional agencies (synonymous with "privatisation" - since the p-word is anathema for the so-called 'activists', who continue to be steeped in pseudo-Socialism, I'll try to avoid using it directly).
 
Not doing so, is harming the environment, economy, quality of life, including of the aam aadmi. The status-quoists, and oppsers, need to understand that. 
 
Muralidhar Rao
murali772's picture

earning brownie points

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As a young electrical engineer, HNA Prasad, 68, would often wonder why there were so many power cuts and why the sun's energy was not tapped by successive governments. Three decades later, Prasad, who started off by working with small photovoltaic panels on the terrace of his Malleswaram home in West Bengaluru, was instrumental in drafting Karnataka's solar energy policy. - - - - -  It wasn't an easy journey. "It was a battle I fought for several years just to make the government understand that something as simple as the sun's rays could work in its favour. My battle started in the 1990s and that resulted in the policy in 2014," said Prasad. He was finally able to convince Bescom MD Pankaj Pandey and energy minister DK Shivakumar about the potential of solar energy in Karnataka and frame a policy that would benefit not only consumers but the government too. "We'll save on the carbon footprint. We always look to the government to give us everything. Why can't we help ourselves, generate power and give back to the grid that would help Escoms give power to those in need?" said Prasad. In September 2014, Karnataka finally released a solar policy of which he was the prime architect. 
 
For the full text of the report in the ToI, click here.
 
Now, while saluting the effort of Mr Prasad in propagating the harnessing of Solar power, it needs to be appreciated that "the policy aims to create avenues for the generation of 3% of the total energy consumption in the state through solar-based systems by the year 2022" (going by this report, again in the ToI). As such, the vast majority of the existing and rapidly growing demand for electrical energy has to come from the conventional sources - thermal and hydro. And, with hydro potential in the state almost totally harnessed, it is inevitable that coal based thermal power (even if generated outside the state) will continue to be our mainstay for the forseeable future. 
 
Now, there's no gainsaying the fact that burning coal contributes in a large way to global warming, and therein lies the importance of efficiency in the management of all aspects of the sector, more particularly distribution, where all the problems are concentrated presently, and therefore where reform efforts are needed most urgently. However, though this has been realised by the state decades back, and spelt out by the KERC (more or less on the lines outlined in the opening post of this blog), under "reforms" on its web-site, the vested interest groups (the right word would be mafia), including politicos at the highest level, refuse to do anything about it - rather, they come up with ingeneous ways of blocking it. 
 
As compared to that, the solar power policy, while undoubtedly being progressive, is more targeted at earning brownie points than for the impact it will have on the overall energy scenario. 
 
The city, state, and the country badly needs statesmen, and not marauders, at the helm. 
 
Muralidhar Rao
murali772's picture

what can India make without power?

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The problems of the power sector were identified as one of capacity — easily solved by getting private entities to set up power plants. However, getting the private sector into generation was the easier part. The challenge was in carrying the process through to its logical conclusion downstream to the consumer end. But distribution as well as retailing reforms remain a political football to this day.

For the full text of the column by Sunjoy Joshi in the ToI, click here.

Yes, the Modi sarkar seems to be barking up the wrong tree. The huge power generation capacity, that Piyush Goel is facilitating the set up of, will all remain woefully under-utilised if the states continue with their refusal to undertake reform of the distribution side of the sector. And, "Make in India" can't happen with the basic power sector crippled this way.

Muralidhar Rao
murali772's picture

mega-watt rip-off

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This Wednesday, India’s banks will add Rs 53,000 crore owed by seven state electricity boards to the long list of ‘bad’ and ‘going bad’ loans.

- - - Total installed capacity is 272,502 MW. Viability rests on use of capacity—typically investor expectations anchor plant load factor (PLF) at 80 per cent. The PLF or capacity usage for 2014-15 was only 65 per cent. Sub-par utilisation of capacity—leaving nearly 50,000 MW of capacity (worth $50 billion-plus) unutilised resulted in outages, lower returns for companies and stressed bank balance sheets.

Some have argued that perhaps demand is low. But this flies in the face of the following factoids: nearly 280 million people exist without access to electricity, at 900kWh per capita consumption is pitifully low. There is also the argument that capacity utilisation was hurt by availability of fuel. Truth is that capacity utilisation is hit by the practice of crony socialism —the divorce of cost economics from price economics—for votes.

Consider the business model. Nearly a fourth of the power consumed (ostensibly) by the agriculture sector yields roughly 8 per cent of the revenues. Free power culture has resulted in a no power regime. The middle class is being exhorted to surrender LPG subsidy. Why not make the big farmer pay? Industry consumes 30 per cent of the power and delivers 41 per cent of the revenues—the unusually high tariff eroding competitiveness.


Add to this the phenomenon of transmission and distribution losses —euphemism for leakage and theft, which accounts for 25 per cent of the power generated. Forget China (5.73 per cent), even Bangladesh has a lower T&D loss level at 10.28 per cent. In 2012-13, India lost Rs 1.05 lakh crore —Rs 287 crore/day—three times sum allocated for MGNREGS. In 2014-15, India produced nearly 94.94 billion units. Imagine not realising the value for a quarter of this—do the math, for roughly 23 billion units at Rs 5 per unit.

The business model is bust. State electricity boards owe banks a total of Rs 3,04,000 crore. Are they in a position to pay back? The answer lies in the profit loss statement of SEBs given to Parliament. Part estimates of losses—because only 42 of 55 utilities have reported data—of SEBs were Rs 76,869 crore for 2012, Rs 69,726 crore for 2013 and Rs 50,532 crore for 2014. The cumulative losses of SEBs stand at over Rs 3 lakh crore.


Unsurprisingly, there is much discussion about a revival which is really a bailout. The catalyst is really the fear of rising NPAs in the banking sector. Without doubt, political parties across states will campaign for funds to revive the bankrupt SEBs to enable them to sustain political rent.

- - - It is critical that this revival of SEBs furthers the cause of much-needed reforms. It is time to open up the electricity sector to competition and enable efficiency.

The Electricity Act needs to be amended— to make Power Purchase Agreements portable, to allow the entry of new players in distribution. Indians deserve choice, to be liberated from SEB monopoly.

- - - Power tariff must be based on costs. Subsidies should be budgeted for and paid by the state—not borne by SEBs and delivered directly.

India simply cannot sustain the pretend-and-extend variety of reforms. It is time to cry halt to this mega-watt rip-off.  


For the full text of the brilliant narrative on the current power scenario by Mr Shankkar Aiyar in the New Indian Express (emphasis added by me), click here.

I couldn't help but post a large part of the article, since it graphically describes the pitiful scenario in great detail. I would still recommend a reading of the full text for those who have specific interest in the subject.

Now, Karnataka is also amongst the states guilty of the charge of the mega-watt rip off. And, the irony of it all is that the government itself realised the unsustainability of the existing model, decades back, and charted out the distribution privatisation path on the KERC web-site (under'reforms'). However, the vested interests, headed by neta's themselves, kept coming up with various ingeneous ways of blocking it.

Most shamefully, the scenario continues even today.

Muralidhar Rao
murali772's picture

Namma solar hype - largely a cover up

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Solar electricity is most promising. But it is also hugely subsidized today. Stripped of subsidies, solar power currently costs 14 cents/unit (around Rs 9.5/unit). With subsidies, solar producers have been able to reduce their bids substantially in recent years. Adani has just signed a deal in Tamil Nadu to supply solar electricity at Rs 7.01/unit.

But add transmission and distribution costs, various levies, plus cross-subsidies for farmers and homes, and bulk power for industry will cost Rs 9/unit. That is prohibitive and will make users uncompetitive. Big companies producing captive power from captive coal mines say their electricity costs just Rs 2/unit. This will go up a bit after high auction prices for new captive mines, but will remain far below even subsidized solar power. But not every manufacturer can generate captive power.

Most state electricity boards are bust, with accumulated losses approaching Rs 300,000 crore. Some electricity distribution companies refuse to buy even small amounts of expensive solar power that they are mandated to buy, and many refuse even cheap conventional power for want of funds.

Being non-polluting, solar power deserves some price preference. But it already enjoys huge preferences. Taxes, cesses, royalties and auction prices are levied on fossil fuels. Equipment for thermal power and coal mining equipment is taxed, while solar equipment is highly subsidized and mostly duty-free.


For the full text of the column by Swaminathan Aiyar (which I would strongly recommend a reading of) in the Sunday ToI, click here.

On 27th April (scroll above), I had posted a comment, which inter-alia stated that "solar power policy, while undoubtedly being progressive, is more targeted at earning brownie points than for the impact it will have on the overall energy scenario", claiming as I do a more than layman understanding of the subject.

This brilliant column now besides puts in proper perspective the economics involved. As such, the hype that is sought to be built by "Namma Governmentu" over what it claims are its achievements in the field, is plainly a ploy to divert attention from its refusal to undertake proper reforms - in essence, acqueising in the massive loot, by vested intrests, that's been going on from long.

It's time the people called the bluff.

Muralidhar Rao
murali772's picture

power, power everywhere - but, no money to buy

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We would purchase power from all available sources and from the Centre whenever other states surrender power,” Shivakumar said.

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

Actually, power is available in plenty, going by the following excerpts from an Economic Times report (accessible here - emphasis added by me):

There are no takers for all the generation capacity that is in place. There is demand but they don't have the money to pay for the power due to the health of the discoms (state distribution companies)," a senior government official told ET, adding that discoms across all states had incurred accumulated losses of Rs 2.51 lakh crore in 2012-13.

- - - India now has an installed power capacity of 158,000 MW with 30,000 MW more in the pipeline. Another 1,00,000 MW would be added from solar power over the next five years, as per the government's plans. "Who will buy all this power if discoms are unhealthy?" said another official aware of the presentation made to the Prime Minister by the NITI Aayog on May 2 where the issue was red-flagged.

- - - "Just six state discoms are not in the red - Karnataka, Gujarat, Punjab, West Bengal, Delhi and Sikkim and transmission and distribution sectors require an investment of Rs 3 lakh crore," said an official referring to the NITI Aayog presentation to the PM.


The question is of the ability of the Discoms to pay, including those in Karnataka, who, while showing profits on paper, are all dead broke, with the government owing each of them thousands of crores by way of farm subsidy.

The minister is plainly misleading us all. The only way out is full scale reforms - yes, privatisation of distribution, particulrly in cities, quite like on the Delhi model (check here) has to happen, and fast too, if we have to attain salvation from the vice-like grip of the mafia confederation, headed by the politicos.

Muralidhar Rao
murali772's picture

money no problem, but will hold onto KPCL's funds for 21 months

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As Karnataka reels under drought, the cabinet on Monday decided to impose scheduled power cuts, from two to eight hours on a rotational basis across the state, possibly from next week.

While the power cuts are likely to be restricted to two hours daily in Bengaluru, it will be four hours in the district headquarters and as much as six to eight hours in the towns and rural areas. Added to this will be unscheduled power cuts.

- - - Earlier in the day, energy minister DK Shiva Kumar said power situation in the state has reached a precarious situation due to drought and they are doing their best to tide over the crisis. "Money is not at all an issue and we will buy more power from private producers to keep the widening gap between demand and supply under check," he added.


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

Now, if you go to KPCL's web-site, you can read the following:
 
Total realization from ESCOMs/ KPTCL during the year (ended 31/03/14) was at Rs 5231.32 crores. The outstanding dues from ESCOMs/ KPTCL as on 31.03.2014 is Rs 11690.32 crores.  

The above is on a Gross income from Sale of energy of Rs 6592 cr. In essence, KPCL is owed by their only customers, viz ESCOMs and KPTCL, close to 21 months of their billings, any given day.

The site also wistfully states - KPCL has requested GOK to liquidate the old outstanding dues by KPTCL/ESCOMs as per the Implementable Action Plan submitted to GOK under “Financial Restructuring Plan for realisation of KPCL dues from KPTCL/ESCOMs”.

So, if "money is not at all an issue", as stated by the minister, then what is keeping the government from settling the 21 months' dues to KPCL?

All in all, for all that the minister says, the drought is only a part of the problem. The much bigger problem is mismanagement (rather manipulation) of funds. And, as long as the utilities remain under government control, it will remain that way, and the power problem will continue - nay, get worse.

Do read my post of 21st May, 14, captioned 'Corollary'(scrolling above), talking of how the Supreme Court reversed its earlier order to enforce financial discipline, after the private distributors came into the picture in Delhi. Very clearly, privatisation (more specifically of distribution) is the only way out.

Muralidhar Rao
murali772's picture

on-line petition started

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A major reform must be privatization of discoms to ensure their professional management.

For the full text of the 'my opinion' column by Mr S L Rao, the first CERC of the country, in the ToI, click here. Accordingly, I have today started this on-line petition, addressed to the CM. I would like to request all Prajagalu to endorse the same, as also to propagate the message.

Mr S L Rao has also stated, in the column "Coastal power plants using imported coal must be built with maximum environmental safeguards". I wouldn't however like to endorse that view. The verdant West Coast is not the best of locations for setting up thermal power plants, however much 'environmental safeguards' you may want to incorporate. One Udupi Power Corporation damaging the environment is bad enough - we don't need more.

As much damaging as the setting up and operation of a thermal power plant in the verdant coastal belt is, is the drawing of HT power evacuation lines to the load centres in and around Bengaluru, through the thick evergreen forests, entailing felling of thousands of full grown trees. Not quite worth it from any angle, leave alone environmental.

The largely arid, and sparsely populated, Raichur/ Ballari belt, with fairly good rail connectivity to the coal belt, is ideal for thermal power plants. Replacing the age-old 210 MW, with 500 MW units, at Raichur, apart from adding a few more 500 MW units at both the locations, will enhance the capacity from the area to 5K to 6K MW, which, alongwith the central allocations, routed through Kolar, will be good enough to largely take care of the base load of the entire state.

But, for all of that, what is needed first and foremost is that the operating agency, viz KPCL, be paid all its dues, as also ensured timely payments in future, which can happen once the CM implements what is requested of him through the petition. There isn't any other conceivable option.

Muralidhar Rao
murali772's picture

Can an NPA be disbursing dividends?

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KPCL gave a cheque of Rs 41.4 cr to the CM at its 45th AGM. Energy Minister, Shivakumar, handed over the cheque of profits earned due to power production. KPCL made a transaction of Rs 6993 cr last year.

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

Now, if you go to KPCL's web-site, you can read the following:
 
"Total realization from ESCOMs/ KPTCL (KPCL's only customers) during the year (ended 31/03/14) was at Rs 5231.32 crores (for a turnover of Rs 6592 cr). The outstanding dues from ESCOMs/ KPTCL as on 31.03.2014 is Rs 11690.32 crores (ie equivalent of close to 21 months' billings).

Even by the most liberal reckoning, KPCL is very clearly a "non-performing asset" (NPA). The question that arises is how then are its creditors, more particularly the banks, allowing the disbursal of dividends? No private sector company would have been allowed to carry on its operations under circumstances anywhere close to this.

An RTI query appears in order.

Muralidhar Rao
murali772's picture

street-lights can work only when there's power supply

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In the context of the repeat of the Nirbhaya incident in Bengaluru, when complaints arose about lack of street-lighting, the district-in-charge minister, Mr Ramalinga Reddy has been claiming that they are working fine - check this report in the New Indian Express.

But, the problem is that the street-lights can work only when there is uninterrupted power supply. However, that's not happening because of the incapacity of BESCOM, caused largely by the government holding back payments in tens of thousands of crores on the farm subsidy account. And, the only cure for it, as has been brought out clearly in this blog, is privatisation of distribution, more specifically in the cities. There's clearly no other way out.

The government will relent only when te citizens demand it. So, let's just do it - just endorse this petition.

Muralidhar Rao
murali772's picture

chasing a wrong solution

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Despite the crisis, chief minister Siddaramaiah has some comforting words. "The power shortage that you are seeing today is a temporary phase. We are working towards energy security for Karnataka and planning to add 22 gigawatts of all forms of power by 2022," he said on Wednesday at the inaugural of preparations for Invest Karnataka 2016.

- - - - The severe power supply crisis is likely to stymie the efforts of the industries department to project the state as an attractive investment destination at Invest Karnataka in February 2016.

- - - - A senior official in the energy department says the power holiday has nothing to do with shortage. "Ahead of the panchayat elections in December the government is keen on ensuring a minimum of 20 hours supply to domestic consumers and 10 hours of three-phase supply to rural areas in the backdrop of increasing farmer suicides. They desperately want suicides to stop by then," according to him.


For the full text of the report in the ToI (emphasis added by me), click here.

This is certainly not a "temporary phase", unlike what the CM likes us to believe, since the basic approach of the government to finding solutions, as of adding generation capacity, is fundamentally faulty. The biggest problem is financial indiscipline, and there's no escaping the solution to that as of privatisation of distribution, as already elaborated on, all through this blog. Either the CM is himself in the dark, or he is simply trying to bluff his way out of a grim situaion. Sooner he faces the reality, the better for him, and all of us, since otherwise, it'll be not only the farmers who'll be driven to desperation, but even people from other sectors of the economy.

Muralidhar Rao
murali772's picture

we are worse off than even rural Bihar!

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I am currently touring Bihar, and villagers say that electricity is available for 12-18 hours a day. City-dwellers say they get electricity almost all day, but with intermittent outages.

For the full text of the blog by Sri S A Aiyer, in  te Sunday ToI, click here.

Well that's far better than the so-called tech capital of India, Namma Bengaluru.
 

Muralidhar Rao
murali772's picture

perhaps, it will require courts to enforce professionalisation

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An electricity company will have to shell out compensation money for an undeclared power failure in Surendranagar town which led to the death of a patient due to the failure of a hospital life-support system.

Consumer courts held the electricity company guilty of unfair trade practice because it had not issued a public notice at least 48 hours before the power cut, which is mandatory according to the company's own rules.

- - - According to case details, a retired teacher Madhuben Vyas was hospitalized in Surendranagar's CJ Hospital and was on a ventilator on December 16, 2010. Due to a sudden power outage, the ventilator stopped working and the patient died from respiratory problems.

Vyas's five children sued the electricity company - Paschim Gujarat Vij Company Ltd (PGVCL) for the power cut without the mandatory prior notice, which is required to be published in mass media. They argued that PGVCL had not issued a public notice about the power cut and their mother died because of it. - - - They demanded Rs 3.5 lakh as compensation.


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

Reading about this in Bengaluru, where we have more hours of power cuts (both scheduled and unscheduled) than supply, gives a feel that we are living in some sub-Saharan African village, rather than in supposedly the tech capital of the country. It's a crying shame alright!

Actually, there's a much bigger compensation claim on BESCOM, pending before the Karnataka High Court, due to the death of Mr Manoj Kumar Vasanthrao Patil, vice-president, Sundaram Auto Components, Hosur, caused by BESCOM's basic negligence (check my post of 18th June, 14, scrolling above). Hopefully, the Gujarat court's verdict, detailed above, will strengthen the case before the Karnataka High Court.

Apparently, there is no other way to make the government-run utilities accountable. And, when more and mre such cases pile up, the utilities will be forced to professionalise, for which, they will essentially have to turn to the private sector. Gujarat itself provides a sterling example of a well-run private sector utility company, viz Torrent Power, which distributes power in Ahmedabad, Gandhinagar and Surat.

Actually, Paschim Gujarat Vij Company Ltd, though fully government-owned, is not too bad a performer. However, catering as it is to large sections of the rural loads too, quite like BESCOM and other Karnataka discoms, it too seems to be having difficulty in restraining the T & D losses to below 30% level. But, with the current Gujarat government far more prudent in its subsidy, and overall financial management, the company seems to be doing a fair job on its hand. All the same, the question that arises is how do you ensure future governments continue the financial management prudence, but instead choose to go the present Karnataka government way? And, that's where you need to look at different models, even for distribution in the rural areas.
 

Muralidhar Rao
amithpallavoor's picture

Consumers need to be aware and responsible as well!

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Murali, I am happy that the courts have woken up to the needs of the much harried consumer. Well in Bangalore, people are happy wasting power through needless illumination of buildings in a bid to celebrate the festival of lights. There is much ado festivals being the only way to celebrate our cultural heritage whilst wasting scanty resources that we have without realizing the grave danger that this kind of behaviour would put us into.

We can't expect much action from the government if the paying public remain callous and insensitive. Most consumers are not even aware of the different sources from which power can be generated.

There is not a single project in Karnataka, which can claim to be generating substantial amount of power from non conventional sources like Wind, Solar, Wave or Tidal. This is despite the fact that CPRI is headquartered in Bangalore and is known to have done quite a bit of work on the power generation front.

 

 

 

murali772's picture

SriLanka has 24/7, 365 days a year, power supply; but - -

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Was on a tour of SriLanka over the past week. There were no signs of gensets anywhere from Colombo to Kandy to Nuvara Elia to Galle, all of the places I travelled. Talking to the local people, they further corroborate that they have 24/ 7, 365 days a year of dependable power supply all through the country, including the remotest of villages. The orderliness of the transformer, and other related installations, by the road-sides, also indicate a fairly healthy state of the Ceylon Electricity Board - yes, a government monopoly - which serves the entire country.

Yes, a government monopoly can do the job. But, read the report below, appearing in a Colombo newspaper:



The board is making huge losses. As such, even as things look hunky-dory currently, the board has obviously to approach the government for anything and everything it may want to do - meaning loss of autonomy.

Now, in our own South Mumbai too, it's the municipality controlled BEST which is supplying power, and they are generally seen as doing an eficient job. But, quite like Ceylon EB, but unlike Reliance, who are supplying power in North Mumbai, under similar conditions as BEST, and under the oversight of the same Maharashtra ERC, they too are incurring huge losses.  

Is that a satisfactory state of affairs?

Muralidhar Rao
murali772's picture

investment in gen-set dealership best bet in Karnataka

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The Bengaluru Electricity Supply Company has filed a petition before the Karnataka Electricity Regulatory Commission (KERC) to consider flat rates for its telescopic tariff plan, which means that the electricity bills are going to get bigger.

The new petition has been filed before KERC after the electricity company asked the regulatory body to consider a hike of 80 paise towards power tariff across consumers to mitigate its loses.


For the full text (emphasis added by me) of the report in the New Indian Express, click here.

This is even as generating companies are dropping their charges, which form over 80% of DISCOM input costs, going by the following excerpts from The Economic Times (for the full text of that report, click here):

NTPC has cut average cost of generating electricity from coal by 13.6 per cent in the last three months by slashing coal imports, saving consumers Rs 300 crore a month.

NTPC cut back on buying costlier imported coal as well as augmented domestic supplies to reduce fuel cost, chairman of the country's largest power generator AK Jha said.
 
"The measures taken have reduced average energy charges by 13.6 per cent from Rs 2.06 per unit in September to Rs 1.78 in December," he said. This has led to lower per unit cost to consumers. "Cost of purchase by state DISCOMS is lower by Rs 300 crore per month," he said.


Further, even as many states, including those rules by non-BJP parties have joined the Centre's Ujwal Discom Assurance Yojana (UDAY), going by the following excerpts from a news report in The Economic Times (for the full text of that report, click here)

Kerala, West Bengal, Uttar Pradesh, Bihar and Odisha are slated to join the Centre's Ujwal Discom Assurance Yojana (UDAY) scheme for revival of state electricity distribution utilities, coal and power minister Piyush Goyal said on Thursday.

Karnataka just refuses to.

Apparenently, the powers that be are happy with the status quo - well, for obvious reasons. They just dont want to solve the problems. And, mind you, the problems are huge. The full impact of it all will be known immediately after the Invest Karnataka jamboree on 3rd & 4th of Feb. One needn't be surprised by even 50% power cuts, and over 6 hrs of load shedding a day. Of course, in rural areas, it'll be far worse than it already is.

Considering all of that, the best bet for investment in the state will be in gen-set dealership (for manufacture, you need power). You can be assured of a good going for at least another decade.

Muralidhar Rao
murali772's picture

UDAY can help; but, lot more required of the state

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Seven states, including Karnataka, signed a Memorandum of Understanding (MoU) for 24x7 power supply for all under the Uday Scheme of the Centre here on Saturday.

After inaugurating Elecrama-2016, a showcase event of the electrical sector, Union Minister of State with Independent Charge for Power, Coal, New and Renewable Energy Piyush Goyal spoke about the  opportunities in the electrical industry of the country in the immediate future.

- - - - Further, he hinted that the quality of products needs to be world class.


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

Finally, Karnataka too has come on board, though reluctantly, one would think, since the age-old ways of the state-owned DISCOMs will now have to change. And, if world-class products are to become the norm, half of the DISCOMs' current vendors, including the government's own KAVIKA (read here for more) will have to close down.

Well, the mafioso, right at the top, have worked their way around earlier reform efforts to eventually carry on in their own ways. So, can't be too sure that they won't be able to do the same to UDAY too, however much Piyush Goyal-ji may have worked to plug all the loop-holes.

Muralidhar Rao
murali772's picture

Yes, Sir, that's the only way out

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During a public hearing on tariff revision on Friday, TV Mohandas Pai, vice-president of Bangalore Political Action Committee (BPAC), a non-profit advocacy group, suggested that the commission look into the possibilities of privatizing the electricity supply companies (ESCOMs) and decreasing cross subsidy component in the tariff structure.

KERC is here to protect the consumer and not the inefficiency of the companies. The ESCOMs are owned by the government and because of the latter's poor performance, it is passing the burden of recovering losses to the consumers,“ he said.


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

Say that loudly, Sir. There's no other way out of the total anarchy prevailing in the sector.

Muralidhar Rao
murali772's picture

Suffer silently, Mr Minister?

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Tired of unending power cuts, Sai Giridhar Rai, a farmer in Karnataka’s coastal Dakshina Kannada district picked up the phone, dialled the state’s Power Minister and let off some steam. He was promptly arrested on the charge of abusing the minister. Though the use of abusive language cannot be justified, he cannot be blamed for what he did. It’s still early summer but temperatures are already nearing 40 degree Celsius in coastal areas — at least a couple of degrees above normal for this time of the year. Add to that the erratic power supply. Who can be blamed for losing their cool?

The incident highlights the grim power situation in Karnataka. While the power demand is increasing every year, the total generation has remained almost static.

- - - Otherwise,
the ruling class will have more people like Rai across the state to contend with..

For the full text of the editorial column in the New Indian Express, click here.

How long are the citizens supposed to suffer silently, particularly when it's an established fact that the grave situation has resulted out plain mis-handling of the sector?

Yes, quite as the editorial has stated, it's inevitable that "the ruling class will have more people like Rai across the state to contend with".

Muralidhar Rao
murali772's picture

flawed approach

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Urban and rural domestic power consumers will have to shell out 30-50 paise more per unit from April 1, translating to a hike of 9% on the overall bill.

The Karnataka Electricity Regulatory Commission (KERC) on Wednesday allowed one of the highest increases in recent times of 48 paise per unit, though electricity supply companies (Escoms) across the state had sought a 19.05% hike of Rs 1.02 per unit.

Blaming the Centre's order disallowing electricity supply companies from carrying forward their regulatory assets (previously-incurred losses in the nature of deferred expenditure) and the hike in cess on coal, KERC approved of the hike across categories of consumers, including those using irrigation pump sets and under the Bhagya Jyothi and Kuteera Jyothi schemes.


For the full text of the report (emphasis added by me) in the ToI, click here.

As compared to the talk of the supposed "hike in cess on coal", the following are the extracts from an Aam Aadmi party white paper on power supply (accessible here) - "the newly commissioned Reliance owned Sasan UMPP bagged coal blocks by bidding to supply power at Rs 1.196/ unit". And, that being 80% of Delhi Discom's input costs, is how AAP government got the Discoms to reduce the tariffs, after facilitating the switch to buying bulk power from Reliance (from the earlier arrangement with NTPC), by first ensuring timely cash-flow. As compared to that, the Karnataka government has added another Rs 1641 cr in one year (going by the extracts reproduced below from another ToI accessible here) to the already unsustainable existing farmer subsidy burden of Rs 6,500 cr odd.

"The KERC said: “The estimated subsidy the government must pay in 2016-17 for free supply of electricity to these 25.9 lakh IP sets and another 29 lakh under the Bhagya Jyothi and Kuteera Jyothi households is Rs 8,838 crore.“ For 2015-16, the government paid Rs 7,197 crore".

And, how can the Centre be blamed for disallowing the regulatory assets to be carried forward indefinitely?

The latter ToI report also stated as below:

The Karnataka Electricity Regulatory Commission on Wednesday ordered a GPS-based survey of all irrigation pumpsets in the state. These get free electricity through government subsidy .

“The government said there are 25.9 lakh IP sets in Karnataka. However, we believe many are non-functional and therefore we've ordered a survey to be completed in six months. Those which don't figure in the survey will not receive subsidy,“ KERC chairperson Shankarlinge Gowda said.


KERC in essence is calling the ESCOMs' bluff, of hiding its operational inefficiency under the farmers' 'panchhae'. But, of course, how can any ESCOM, or for that matter any organisation, function efficiently, when it is owed a colossal Rs 8,000 odd crores, equivalent of some ten months of its billings?

The need, and a desperate one at that, is financial discipline. And, that can come about only through privatisation of distribution, as has clearly been shown by the total transformation of the power supply scene in Delhi over the past decade or so.

And, as for rural loads, the supposed free power supply, in actuality, is residual supply when all other needs have been met, which is rare. This situation is adding considerably to the already desperate situation there, causing total abandonment of agriculture and large scale migration of the population to urban areas. The only way out is to bring in accountability, all through, and that can be best achieved through rural co-operatives. Hukeri in Belgaum provided a good model - all that's needed is strengthening of it.

Muralidhar Rao
murali772's picture

arrogant BESCOM

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Last weekend, the residents of Parkway Tivoli apartments in Seegehalli, near Kadugodi, east Bengaluru, went without electricity for 18 hours. The 100 families living there are now used to long-duration power cuts, some lasting eight hours a day, for the past three months.

They also know the reason why: their refusal to pay Bescom assistant engineer Puttaswamy a monthly bribe.


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

In the very first place, why Karnataka should be suffering power cuts, and exorbitant tariff increases, even as Central Power minister, Sri Piyush Goyal, tweets saying "Summer afternoon power check today: 4397MW available at Rs.2.00/unit for states to buy" (check here) needs to be asked.

Then again, the question of why Bengaloreans should be suffering the ignominy of having to cringe and crave before the BESCOM engineers, needs to be asked, even as customers are treated like they need to be by service providers in Mumbai, Ahmedabad, Surat, Greater Noida, Kolkata, and lately Delhi.

Raise your voice, folks! There's no other way!

Muralidhar Rao
amithpallavoor's picture

Sorry to digress, I don't see

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Sorry to digress, I don't see a problem as to why privatization can't become a reality as regards water utility?

I know this is a sensitive topic. 

 

murali772's picture

off topic

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In the case of water supply, the need perhaps is for outsourcing of distribution to reputed professional agencies - check here.

I recently saw a video on TimesNow on "Orange City Water Private Limited (OCW)" operations in Nagpur. Seemed to convey a positive picture. Earlier criticisms from known 'dissenters' were countered by me here.

PS: Please keep the debates on water supply to the appropriate blogs.

Muralidhar Rao
amithpallavoor's picture

It is not just about

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It is not just about privatization but there is an urgent need to desubsidize water that is being pumped from Mysore to Bangalore.

People have no value for this scarce commodity. 

 

murali772's picture

@ Amit - Water from Cauvery,

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@ Amit - Water from Cauvery, for Bengaluru, is being drawn from Thorekadanahalli, near Kanakpura, and not from Mysore. And, the cost aspect too is brought out in my post on Orange City Water Private Limited (OCW) - check here.

Please limit the talk here just to power supply issues.

Muralidhar Rao
murali772's picture

different agenda

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While asserting that southern states have benefited from the increase in coal availability and helped them combat power shortage during drought, Goyal said: "Karnataka is a small exception because when power supply was offered to the state during such a situation, it refused to accept it."

However, the minister didn't say at what cost the power was offered to be sold to the state government.

Citing the fire accident at Sharavathi generating station in Shivamogga which exacerbated Karnataka's energy woes in March, Goyal explained: "After the incident, Union ministers DV Sadananda Gowda and Ananth Kumar proposed to supply 200 MW of power from the unallocated supply of the southern grid to the state, which was facing acute water shortage as well. Unfortunately, for reasons best known to it, the state government refused the offer."


For the full text of the report (emphasis added by me) in the ToI, click here.

Actually, there's enough capacity in Karnataka itself, with a healthy mix of thermal and hydro, even with the outage caused by the accident. But, a shortage situation has been artificially created and sustained to buy power from Udupi Power Corpn, and Jindal Power, through arrangements which perhaps Piyush-ji should ask Jaitley-ji to have them investigated into.

Piyush-ji has been tweeting availability of hundreds of mega-watts of power at a nominal Rs 2.50 odd on a daily basis, which I am sure is far lower than the purchase price from the Jindal and Udupi. If GoK wanted solutions, they would have grabbed it. But, they obviously have a different agenda !!!

Muralidhar Rao
murali772's picture

the writing on the wall

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There is a need to ensure greater competition in the country in sectors such as public transport, railways and power distribution, which are dominated by the public sector, to ensure better products and services, according to Arun Jaitley, Finance Minister.

“Competition is at the heart of a market economy. Socialism, per se, is anti-competitive as it promotes state-owned monopolies and restrictions. That is never in the consumer interest. It is always competition which ensures that the best product and service wins,” he said while delivering a lecture on ‘Competition, Regulator and Growth’ at an event organised by the Competition Commission of India (CCI). “Competition creates innovation, efficiency, price competitiveness, greater choice and better quality of products and services and higher investment,” he said.

- - - Referring to state government-owned power distribution companies, he said they were the third-largest contributor to bad loans - mostly due to the populist policies adopted by the state governments to score political brownie points.

Opening up the power distribution to competition is an important reform that must be done soon, Mr. Jaitley said.


For the full text of the report (emphasis added by me) in The Hindu, click here.

This is quite the imperative that this blog has been projecting from 2008, and even before.

The writing is finally on the wall, even for Karnataka. Ironically, distribution privatisation route had been spelt out decades back itself on the KERC web-site.

Muralidhar Rao
murali772's picture

BESCOM's obligations

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Demand for spot power declined by 10% in May from the month-ago period despite rising temperatures, explaining the long blackouts as utilities preferred to shed load rather than buy more power even at low prices.

According to data from Indian Energy Exchange, the average daily trade stood at 95 MUs (million units), or 10% lower than 115 MUs traded in April when the weather was comparatively milder. Overall, 2,929 MUs were traded, 15% less than the 3,465 MUs traded in April.

- - - This bears out the theory that outages are being caused mainly due to the inability or unwillingness of states to buy more power for fear of running up further losses.


For the full text (emphasis added by me) of the report in the Economic Times, click here.

And, this power is available at less than Rs 2.50 per unit, which normally constitutes around 80% of a DISCOM's input costs. By that reckoning, the average distribution tariff should be Rs 3.125 per unit. As such, even as a DISCOM could have afforded to lower its tariff if availing the power on offer, BESCOM has, as of May, increased the tariff by another 50 paisa per unit, making it Rs 5.90 pu for consumption beyond 100 units, and Rs 6.90 pu for consumption beyond 200 units (normal household consumption range). The reason - well, you know - they have 'certain' obligations towards Udupi Power Corpn, and Jindal Power Corpn, who in turn apparently have obligations to certain 'parties' (check my post of 22nd May, scrolling above). For power traded in millions of units, it's a huge lot of money.

This is of course, when power is available. During outages, which is not at all uncommon, the cost (of stand-by power) goes up some 2.5 times that.

Normal price increases would have been acceptable to the citizens. But, should they be sitting quiet when all of these "deals" are causing to shoot up the costs even further?

Muralidhar Rao
murali772's picture

story of undependable supply in power surplus India

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After turning power-surplus, India is working with Bangladesh on a plan to double the capacity of existing transmission interconnects and set up a third link for increasing cross-border electricity trade in a bid to widen the regional market as new generation capacities come up on both sides.

- - - The talks for enhanced interconnect capacity are well-timed with developments on the ground as power generation grew at more than 9% in the April-June 2016 period against the same period of 2015.


For the full text (emphasis added by me) of the report in the ToI, click here.

For all of that, citizens across most parts of the country (except in Mumbai, Delhi, Ahmedabad, Surat, Kolkata, Greater Noida, etc) remain deprived of dependable power supply because of the non-professionalism of the distributing agencies. And, what makes for the difference in the exceptions? - professionalism, of the private players involved. Isn't the answer obvious?

Muralidhar Rao
murali772's picture

strange irony

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After rolling out the power distribution reform plan, Ujwal Discom Assurance Yojana (UDAY), the NDA government wants to open up the power distribution and transmission sector for competition.

The amendments in the Electricity Act, 2003, would have enabling provisions to allow more than one player in power distribution, including private companies.

- - - In order to create a competitive market for retail buyers, open access will allow consumers of less than one Mw to choose their supplier. Power generators, too, will be allowed to sell their surplus outside a state. A senior government source said some of the state governments were opposed to the entry of multiple players. “As a beginning, we will introduce this in Bharatiya Janata Party (BJP)-ruled states,” the source said.

For the full text of the report in the Business Standard, click here.

Good move to introduce it in BJP-ruled states first. Perhaps, once the benefits become obvious, there'll be a clamour from consumers in other states to follow suit too.

Or, is that asking for too much? Since, even with all the gains by Delhi citizens, resulting out of privatisation of distribution, detailed out here, "Namma citizensu" seem content with BESCOM's far from dependable supply - strange irony for the first city in the country to be electrified.

Muralidhar Rao
murali772's picture

and we pay so much more too !!!

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Accessible here is a tabular column that gives a comparison of current domestic power tariffs in Bengaluru (BESCOM), Mumbai (Reliance), and Delhi (Tata), for a uniform consumption of 436 units (my consumption in May this year). Both in Mumbai and Delhi, the system reliability is said to be 99.99%, meaning you don't need back-up equipment like gen-sets, inverters, converters, batteries, voltage stabilisers, etc, etc. In Bengaluru, however, you can't carry on your life without them.

Now, even without taking into consideration the cost of back-up power, the BESCOM charges are seen to be far higher than in both the cities. If you take into consideration the cost of back-up power, the differential becomes much higher.

This is in addition to costs in terms of noise and air pollution, cost of space occupied by these contraptions in the urban set-up, opportunity costs in terms of lock-up of capital in these contraptions, etc, etc.

Do Bengalureans still want to stick with BESCOM?

Muralidhar Rao
murali772's picture

problems are known; solutions too; but, v refuse to look at them

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There is surplus power in India, but the distribution of power must improve, said S D Dubey, Chairman, Central Electricity Authority, on Monday.

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

Well, we all know that; the solutions are also known. But, the government refuses to look at them, for reasons also quite known. Sadly, the people who should be demanding change, since it's they who are bearing the huge additional costs in the form of various taxes/ cesses, seem happy to carry on their lives dependent on gensets, etc, unmindful of the costs, since perhaps they want to be seen as politically correct.

So, all in all it's a conundrum, out of which, perhaps only a crisis scenario can get us out. The rains in the Cauvery catchment have been pretty poor this year, meaning the cheap hydel generation will be very much limited, and consequently, we'll have to depend largely on thermal power. So, do we continue to buy power from Jindal/ Udupi at the high rates they charge, for reasons that are also fairly well known, or accept Pyush-ji's offers (but of course on conditions on reforms that are in the interest of the people at large, but against the vested interests of a select few people)?

Muralidhar Rao
murali772's picture

state govts' games exposed

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Q: Why are people not getting connections or are having connection but not getting power as lines are not energized by the DISCOMs?

A: This is because, today the financial state of DICSOMs is not all that sound and they are not finding it commercially beneficial. With theft and katiya connections being there, adequate bill generation is not happening. But once people are on a regular metered connection and are paying their bills, the health of the DISCOM will also improve. Simultaneously Government of India has brought schemes like UDAY to improve the financial and operational efficiencies of DISCOMs. So this vicious circle will get broken through various schemes that are underway and overall benefits will be visible.


For the full text (emphasis added by me) of the interview of Dr A K Verma, Joint Secretary, Union Ministry of Power, by Ms Anupama Airy, Founder and Editor at EnergyInfraPost, click here.

The interview clearly points to where the problem lies - financial mismanagement - to put it mildly; but, in actuality, plain siphoning of funds by the state government sponsored power mafia confederations, headed of course by the politicos. The answer plainly lies in privatising distribution in cities (quite like Delhi has done in the recent past - check here), and, in rural areas, entrusting the job to farmers' co-operatives, a fine example being the Hukeri (karnataka) model (detailed more in the opening post), thereby dismantling the present mafia regime, and handing charge to a leaner government machinery, overseen of course by the state regulatory commission.

Governments obviously won't do it by themselves: so, the people have to demand it, and, from the roof-tops!

Muralidhar Rao
murali772's picture

why is Karnataka buying power at double the market rates?

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To be on the safer side, the department is contemplating short term power purchase from Maharashtra for 200 MW at Rs 3.87 per unit and also for 1,000 MW for a mid term power purchase at Rs 4.87 per unit from local sources.

For the full text of the report (emphasis added by me) in the New Indian Express, click here.



Simultaneously, as seen from the picture above, tweeted by Piyush Goyal-ji, any amount of power is available today from the central grid at Rs 2.18 per unit (or thereabouts). So, why is Karnataka buying at almost double the rates? If purchasing from the Central grid, BESCOM should be in a position to effect huge cost reductions, and thereby reduce the tariff to consumers too. Why is that not happening???

Isn't it time people raised this question, and loudly too?

Muralidhar Rao
murali772's picture

Karnataka out of sync with Piyush-ji's objectives?

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It’s time we make policies or schemes around surpluses instead of shortages; We want to get rid of diesel generators by offering sufficient power to purchase for States on Vidyut PRAVAH app; Even if the power demand grows by 10% a year, India will face no shortage of power for the next seven years; I’m keen that coal becomes a deregulated commodity a year and a half down the road.

The above are Piyush Goyal's recent tweets - all very laudable. But, Karnataka appears totally out of sync with them.

PS: Even as I make this post, I hear the gen-set operating in our apartment complex basement

Muralidhar Rao
murali772's picture

Myth vs reality

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The myth propagated by Namm Sarkara for the consumption of the aam janata is seen in the excerpts reproduced below (in italics - emphasis added by me) from a report in the ToI (for the full text, click here). The reality as observed by a discerning viewer is what is intersprsed in normal print.

A power shortage threat looms large over Karnataka, even as a chilly winter sets in. The dry spell is worrying the state government, which fears it may lead to a power crisis much before summer arrives.

- - - A contingency plan on the power situation was finalized by a high-level meeting held last week by chief minister Siddaramaiah and attended by energy minister DK Shiva Kumar. It envisaged meeting the exigency by purchasing power from power traders and other states.


From about six months, Piyush Goyal-ji has been tweeting, on almost a daily basis, the availability of any quantum of power a state/ utility may want. For instance, on 26th Sept, he offered 4307 MW @ Rs 2.18 pu (check my post of same date, scrolling above). Now, with power purchase cost forming about 80% of a DISCOM's overall costs, if BESCOM were to take up Piyush Goyal's offer, it should be able to sell power to the consumer at an average Rs 3.50 pu, even with allowing for a liberal 20% profit. However, as of May, BESCOM increased the tariff by another 50 paisa per unit, taking it Rs 5.90 pu for consumption beyond 100 units, and Rs 6.90 pu for consumption beyond 200 units (normal household consumption range). The reason - they are not buying from Piyush Goyal, since they have 'certain' obligations to fulfill towards Udupi Power Corpn, and Jindal Power Corpn, who in turn apparently have obligations to certain 'parties'. For power traded in millions of units, it's a huge lot of money. In the same post, I had also cited a newspaper clipping which read "the department is contemplating short term power purchase from Maharashtra for 200 MW at Rs 3.87 per unit and also for 1,000 MW for a mid term power purchase at Rs 4.87 per unit from local sources". Buying from local sources @ Rs 4.87 pu is obviously the obligation, as one understands it.

- - - A shortage of coal and water may make it worse as five of eight units at the Raichur station fell short of their production targets, due to shortage of water in the Krishna river last year.

There's no shortage of coal in the country, or water in the Krishna, as of this year. Coal India has been achieving record production ever since Piyush Goyal-ji came on the scene, and River Krishna was in spate during this monsoon due to record rainfall in its catchment.

However, the government is confident it will be able to meet the situation without any cuts, except in the case of rural areas even during summer.

Rural areas are plainly doomed.

P Ravi Kumar, additional chief secretary, department of energy, insisted industries would not be subjected to any cut and that seven-hour supply would be maintained at all costs to agriculture pumpsets.

Well, as of now, Karnataka, for its much envied resources, does not figure in the list of top 10 states in either industry-friendliness (check here), or farmer-friendliness (check here).

Sources said the government has issued instructions to the authorities to make arrangements to provide electricity for the maximum time, till the 2018 assembly elections.

Election-based short term planning.

The government also restricted independent power producers from selling power to other states.

That's a game going on; besides, the courts over-ruled the order when the government tried that the last time around.

The additional burden will eventually be passed on to the consumer through a tariff hike.

Well, there you are!!! Whereas, elsewhere in the country, the tariffs are dropping because of improved overall functioning of all facets of the power sector, since the induction of competent private players into the distribution function, as also the coming of Piyush Goyal-ji into the scene (check my post of 24th July, scrolling above), Namma Sarkara uses the private sector generation companies to milk the system, all at the cost of the consumer.

P Ravi Kumar, additional chief secretary, department of energy, said: "The state is set to become self-sufficient in the electricity sector after two new thermal plants at Ballari and Raichur are opened in one or two months.

Karnataka already has a good mix of thermal and hydel generation capacity. But, it's all been run to ground because of diversion of funds, as also plain embezzlement - check here

The government is aware of the power situation in summer and plans to purchase power only to safeguard the interests of the consumers. Buying power this time won't be a problem as our neighbouring states, including Telangana and Tamil Nadu, have surplus power and the state can buy it cheaply any time."

Power purchase is about the biggest money spinner for the neta's, and the present dispensation seems to have honed it to a fine art.

The only way out is privatisation of distribution, more or less in line with the Delhi model, as discussed here.

Muralidhar Rao
murali772's picture

Shift to digital financial economy stymied by undependable power

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People may want to shift to digital methods of payment now that their faith in currency has been shaken, but outages in bandwidth and unpredictable power supply make reliability of digital systems a big challenge. Paying through phones may be attractive but phones must first be connected to the internet.

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

Even Bengaluru, the tech capital of the country, is badly handicapped because of undependable power supply. As for the rest of the state, perhaps sub-Saharan countries are better off. As such, digital age in the state is eons away.

Muralidhar Rao
murali772's picture

How responsible is the KERC showing up to be?

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BESCOM and the other state ESCOMs have once again placed ads in the newspapers about proposed increases in tariffs, alongwith suggesting that objections, if any, be placed before the KERC.

While, time after time, various NGO's have been participating in the exercise, after making elaborate studies, I have been maintaining that there is no way the job of distribution, particularly in cities, can be managed efficiently by government agencies, and, as such, the same be made over to reputed private players, quite like New Delhi has done, over the past decade (check here; and there are cities like Mumbai, Ahmedabad, Surat, Kolkatta, etc, who have had it from long. Actually, if you open the KERC website, under "reform efforts", sub-para "preamble", you will notice that the Karnataka government itself had committed to 'privatisation of distribution', as far back as in 1997).

I had more or less said the same thing in April 2014 (scroll above to read); but, things have gotten only worse since then.

The problem essentially is that, as long as the job remains with government agencies, financial indiscpline (rather misappropriation) is inevitable. The extent to which things have degenerated is evidenced by the fact that, for a Gross income of Rs 9110 cr (against billings on ESCOMS/ KPCL, its only customers), reported by KPCL in its financials for the year ended 31/03/16 (figures extracted from KPCL web-site), the realisation during the year was a paltry Rs 7938.65 crores, the outstandings therewith peaking to Rs 13615.81 crores, ie 545 debtor-days (nearly one & half years). The irony of it all is that, even under these circumstances, KPCL was forced to issue a dividend cheque to the government for Rs 41.4 cr on its declared profit of Rs 182 cr. It is a surprise how RBI is not clamping down on KPCL's bankers.

Now, all of this is resulting largely out of diversion of funds meant to be paid by the government to the ESCOMs, against farmer subsidies, for other populist pursuits. The ESCOMs are then forced to pass on the burden to KPCL, this in turn leading to the entire sector, up and down the chain, being in total shambles. This then is resulting in cost escalations in multifarious ways, across the sector, which is ultimately passed on to the consumer. As such, mere tinkering with the tariff figures is not going to help any. What's required is total revamping of the sector, beginning with privatisation of distribution in cities - the Delhi model provides a viable template.

Now, a government behaving irresponsibly is passe, though of course not acceptable. And, knowing well, the populist compulsions on an elected government, was why the Karnataka Electricity Reform Act 1999 was enacted by the legislature, in the first place, and KERC set up in 1999, so as to transfer the Regulatory responsibilities from the Government to the Regulatory Commission. But, are we seeing KERC acting responsibly? Allowing for a KPCL carrying on with debtor-days figure of 545 points to the answer.

PS: Even as I make this post, I can hear the genset chugging away in our apartment complex basement. Over the recent past, power interruptions have been the order of the day, with genset operations aggregating to at least some 5 hours a day.

Muralidhar Rao
murali772's picture

coal and power everywhere; but in Bengaluru, it's the genset

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“Now there are sufficient coal reserves for power generation. In fact, we have more quantity of coal at our disposal than that needed for power generation,” said a senior official from NTPC (formerly National Thermal Power Corporation of India).

According to power sector representatives, the thermal power sector is going through a phase where it has more installed capacity to generate power than the actual demand, thus eventually leading to drop in demand for even coal.


For the full text of the report (emphasis added by me) in the New Indian Express, click here.

Even as that's the case, in Bengaluru, supposedly the tech capital of the country, the genset dependence is growing by the day (even as I make this post, I can hear the genset chugging away in our apartment basement, which has become a regular feature now). For the reason, and the solution, check my post of 17th Jan (scrolling above).

Muralidhar Rao
murali772's picture

Minister's innovative solution to Bengaluru's power problem

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As a drought hit Karnataka heads towards a harsh summer, power minister D K Shivakumar has a soother for the residents. "There will be no power cuts in the coming months," he said on Friday .

The minister said the state accounted for a surplus power of up to 20%."This is the first time we have achieved surplus power generation," he said, pointing out that the present consumption was 195 mil lion units per day, while supply was in the range of 200-230 million units per day . But the big question is: How has Karnataka, which is largely dependent on hydel resources, become power surplus when it has been facing drought for six consecutive years?

According to energy department officials, dip in consumption by irrigation pumpsets has resulted in surplus power generation. Energy department officials attribute the phenomenon to a dip in consumption by irrigation pumpsets. "Farmers have not been able to access water for cultivation. Borewells are drying up. Irrigation pumpsets have not been working for several months now and as a result, the demand for power from the agriculture sector has come down." The officials are optimistic of tiding over the power crisis in the coming summer.

Speaking about the MoU with REC, Kumar said several projects, including strengthening of the transmission network, will be taken up at a cost of Rs 39,700 crore.


For the full text of the report (emphasis added by me) in the ToI, click here.

This, one must concede, is a most innovative outlook. And, apparently, his solution for the accursed farming/ rural community has to evolve out of the "strengthening of the transmission network at a cost of Rs 39,000 cr (no less)", under a supposed MoU with the REC.

The question to be asked is why would a REC want to help out a government that has shown total irresponsibility in the handling of the finances of its power sector stake-holders, more specifically in the form of the generating company, KPCL, made to shoulder debtor burden of one and half years (see my post of 17th Jan, scrolling above). Though the state too had supposedly signed an MoU with the centre to lessen the burden, under the UDAY scheme (check my post of 16th Feb, scrolling above), there is no evidence of any progress on the front, obviously since it imposes certain conditions towards ushering in a level of discipline in financial managenent, which apparently is anethama to the minister. So, all the talk of Rs 39,700 cr etc is plain bumkum, and things are going to get only worse for the farming/ rural community. And, it's not as if life for the city folk is going to get any better. In fact, the state as a whole is doomed to a near crisis scenario on the power front, even as there's surplus generation in the country.

Ironically, what the minister has stated willy-nilly points to where the solution may lie out of the present imbroglio - which is

a) isolate the rural/ agricultural load from the city load, and manage it through distributed generation (largely based on solar, wind, mini-hydro, bio-mass and such non-conventional resources), and supply through co-operatives like the state already has in Hukeri, or through franchisees, and

b) professionalise (meaning privatise) city distributuion, more or less like Delhi has done (check here)

But, all of that calls for genuine intent, which unfortunately is a big question mark.

Muralidhar Rao
murali772's picture

hype vs reality!!!

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Reproduced below, in italics (emphasis added by me; interspersed with my comments in regular text), are excerpts from a report in the Deccan Herald of 8th Feb:

Energy Minister D K Shivakumar on Tuesday said he is ready to face "any punishment" if his department does not keep its promise of supplying seven hours of power to irrigation pumpsets.

Does he expect the famers be beholden to him for that???

Replying to a question raised by N Appaji Gowda (JD-S) in the Legislative Council, Shivakumar said power subsidy to farmers is to the tune of Rs 8,500 crore and seven hours of power is being supplied to irrigation pumpsets across the state.

For less than half the amount paid directly into their bank accounts through Aadhaar, the farmers should be able to make their own arrangements (distributed generation - largely solar, wind, bio-mass, mini-hydro; and distribution through co-operatives/ franchises) for far more reliable power supply than the minister can ever think of offering. As such, would he like to liberate them from the clutches of his run-down ESCOMs???

He said while the present demand for power stood at 9,500 MW, the state is in a position to supply 10,500 MW.

If that be the case, why am I facing power interruption even as I am making this post???

Shivakumar said it is for the Karnataka Electricity Regulatory Commission to decide on petitions filed by various escoms seeking an increase of Rs 1.48 per unit for the next financial year. "However, the quantum of hike sought is less compared to that of previous years," he added.

The citizen is being made to shoulder the burden of the total mismanagement of the sector. He is not going to be taking it lying for far too long!!!

And, for all of this the government has the audacity to invite fresh investments claiming the state has the "outstanding infrastructure", if you please!!! - check here.

Muralidhar Rao
murali772's picture

My take-aways from KERC public hearing

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I attended the KERC public hearing on power tariff revision, Monday morning. Having arrived a bit late, I got to add my name to the list of people wanting to make submissions, last, and consequently got my turn also last. In the process, I got to sit through almost the entire hearing, listening to views and submissions from consumer groups across the spectrum. My take-aways are as follows:

The biggest and most heart-warming, as far as I was concerned, was the submission by a 7-member Bharatiya Kisan Sangha farmer group (sporting their green scarves), led by a Dr Ranganath, stating in essence that they no longer cared for BESCOM's so-called free power, and demanding that they be supplied fully metered quality power. And, if the government chose to afford any subsidy to them, the same be routed to their individual bank accounts through Aadhaar. Not just that, he went on to state that the general talk was that the private sector was doing a far better overall job of power distribution, and as such, he suggested that the job be handed over to them.

This was like music to my ears, and when I got my chance, I asked the Commissioner if this was the first time that a farmer group had openly said so. The Commissioner, while acknowledging that it was indeed a very positive approach, and perhaps the first such stance from a farmer group in an open forum, didn't want to give it too much weightage and went on to express doubts as to whether it will have the backing of the many other farmer groups. Either way, that's enough for me to add to my tom-tomming of the case even more.

I went on to submit that, earlier, if you were to open the KERC website, under "reform efforts", sub-para "preamble", you would find mention of Karnataka government itself having committed to 'privatisation of distribution', as far back as in 1997. I asked as to why that was not seen now, and why is it that the KERC was not pursuing the matter, in spite of the far better performance recorded by private players in other cities. I submitted TataPDDL's turnaround data sheet (see below) in support of the same.

To Dr Ranganath's suggestion of the private sector being inducted into distribution, the Commissioner had responded asking if the farmer lot would be prepared to pay their level of billings too, implying that it would be much costlier. Mr Ranganath had responded positively. Adding to Dr Ranganath's stance, I showed the Commissioner the tabulation I was carrying of the comparative tariffs in Mumbai and Delhi (see tabulation below), which clearly gave lie to the impression created that private sector players will necessarily charge higher. At 400 units cnosumption level (for domestic consumers), the charge in Mumbai is Rs 5.97 pu, whereas in Bengaluru, it's already Rs 6.90 pu, and there's the present proposal to increase it further.



And, an equally important factor is that, whereas in Mumbai, Delhi, etc, the "system reliability" is close to 100% (meaning you don't need gensets at all), in Bengaluru, it's far lower, meaning greater dependence on gen-sets, leading to aggregate cost levels becoming much higher.

The Commissioner tried to come to BESCOM's defence saying that the Mumbai and Delhi Discoms were able to achieve better levels of performance because they cater just to urban consumers, whereas BESCOM is catering to both urban and rural consumers. To my response that that's how it should be in Karnataka too, since the load characteristics between the two are totally different, and clubbing them together was only helping to hide inefficiencies (and racketeering too, I should have added), he readily acknowledged with a nod of acceptance, including the point that the rural loads were best addressed through distributive generation (largely solar, wind, mini-hydro, etc), with distribution handled through Co-op Societies, like in our own Hukeri.

I also raised the matter of the near financial anarchic situation prevailing in the state power sector, with government not clearing massive amounts of farmer subsidy to the ESCOMs, who in turn are not clearing their huge dues to KPCL, leading to KPCL's key financial indicators reading as below:

Total income - Rs 9110 cr; debtors - Rs 13,620 cr; debtor-months - 18 months
Share Capital - Rs 4,350 cr; Borrowings - Rs 20,303 cr; debt:equity ratio - 4.7:1

If not for this dismal scenario, KPCL has the capacity to meet the entire power needs of the state. As such, it's nothing short of criminal that the state is forced to buy power from elsewhere at exorbitant rates, even as KPCL is starved of its funds. This is adding tremendously to its costs, which ultimately is being passed on to the consumer. Obviously, there are vested interests at play, very much abetted by the state, whence the judiciary too becomes wary of intervening, as compared to its pro-activeness when the private players are involved, as happened in Delhi - check my post of 21-05-14, scrolling above.

Further, I went on to ask why, though there had appeared a report in Feb 2016 (check my post of 16th Feb, '16 - scrolling above) that Karnataka too had signed an MoU with the Centre to avail the low-cost funding, under the UDAY scheme, to clear the dues (largely farmer subsidy) to the ESCOMs, there doesn't seem to be any effect of that on BESCOM finances, yet. The Commissioner looked at the BESCOM officials, who just made some inaudible remarks, which makes me conclude that there has been no movement whatsoever there too.

Amongst the first to make its submissions was a team from B-PAC, led by Mr Mohandas Pai, who inter-alia dwelt largely on the matter of the so-called short term power purchases at exorbitant costs. More specifically, he appeared to be asking as to what rationale there was to the state buying power from Udupi Power Company at close to Rs 5/- pu, when on a daily basis Mr Piyush Goyal was tweeting Power Trading Corporation's offers for thousands of MWs of power at close to Rs 2/- pu (check my post of 23rd Sept, '16 - scrolling above). An exchange, at this stage, between the Commissioner and a young representative of Power Trading Corpn, about some commitment issue, went beyond my comprehension. Well, when Power Trading Corpn is making such offers, there obviously are some takers, and if power starved Karnataka is not one of them, but instead chooses to buy from Udupi Power at over double the rate, there needs to be some proper explanation. Mr Pai stated that he saw many things wrong there, and the KERC needs to take corrective action immediately. Overall, he stated that, even as the country today enjoys a power surplus situation, it is ironic that the state has to suffer poor quality power supply because of the incapacity of the many state players involved.

Many others made submissions pertaining to their specific areas. This included a representative from wind energy industry, based on whose submissions, it would appear that all the so-called incentives to them are largely just on paper.  

Very plainly, with the present scenario apparently suiting the vested interests of many, including within the government, very little change can be expected. Well, one had thought that's where the Regulator came in. But, for all of the Commissioner's nodding acceptance of almost every bit of the submissions I made, not having acted on them on his own so far, one wonders if there's any redemption for the state on the power (a key infrastructure) front, at all.

In such a scenario, can the citizens afford to just remain silent??? - particularly so, when there are enough cities in the country enjoying quality power - yes, supplied by private players.

Muralidhar Rao
dvsquare's picture

BESCOM management not at responsive after mannivannan Sir

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I have sent multiple emails to bescom helpline, AEE of my area, MD and everyone there, but get no response. They open a new ticket always, I get a call from local engg, asking of power is restored.

This is what I sent - 

Hello Sir,

I am a resident staying in <my full address>, which comes under S11 subdivision, Bellandur.

This is regarding many power fluctuations and to add to that, long power outages every day in last few months. Surely, all of these can’t be attributed to rain and summers.

I am attaching a document here, which will give the details of all power cuts being done in month of July-2016.

You will see 70+ instances of power outages for various times ranging from 1 min to more than 8 hours. You can see a lot of outages for duration in few hours.

You will not see a single day there when power outage didn’t happen.

Total power outage duration is more than 100 hours in last month,July 2016.

The months of Jan, Feb, Mar, Apr, May, June were not any better, we have had the similar outages earlier also and even before that. If you need, I can get you earlier month’s outages durations also.

Lets come back to outages happened in July 2016.

May I ask the reasons for -

  1. Why we get multiple times outages every single day ?

    1. Is it because BESCOM has faulty feeders or transformers related to our area?

    2. Is it because BESCOM in our area has line problems or because of old materials/machines, its giving problems?

    3. BESCOM is not doing regular maintenance of the machines involved?

    4. Replacement of bad/spoilt machines are not happening?

  2. We have got the number of 2 engineers Mr. Manjunath and Mr. Venkatesh. I have been able to get through Mr. Manjunath to let them know about the power issue, but Mr. Venkatesh never picks up the phone.

  3. Is there any process in BESCOM guidelines to compensate consumer in case of such extreme, long, repeated power outages.

 

Please understand, we are ordinary citizens facing these problems day over day, from last many months, and spending lots of money on purchasing diesel to run our DG in absence of BESCOM power, while we pay BESCOM bills on time.

100+ hours of power outages in just 1 month is approximate 3+ hours of power outage per day is worrisome for citizens as well as BESCOM operations.

 

I hope, you will understand the matter and respond to complaint soon, and also hoping to get resolutions of power outage problems soon.

 
And then I also shared the July 2016 full month 100+ hours of power outage breakup date and timewise.
I don't know what to do next? 
Will filing RTI help?
How to make these guys responsible for providing uninterrupted power supply?
 
Thanks
Deepak
murali772's picture

oh, for a "gen-set mukt" Bengaluru

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8 users have liked.

Hi Deepak

The stark contrast between BESCOM performance as detailed by you, and Tata PDDL, Delhi (check my post of 22nd Feb, scrolling above - the salient features being System reliability - 99.68%; Mean time to repair faults 1 hr 53 min; Call centre performance - service level - 92%; Consumer satisfaction index - 84%) are there for all to see. In addition is the fact that the tariff at 400 units consumption level is lower by close to 15%. Yes, BESCOM tariff is slightly lower at lower consumption levels, but that's for much poorer quality supply, meaning large dependence on far costlier stand-by power, whereas in Delhi and Mumbai, you are more or less "gen-set mukt"

But, for all of that, it appears that Bengalureans are content suffering BESCOM (dis)services, going by the reaction of the people, I made a presentation to, yesterday. The P-word still continues to be politically incorrect, it appears, or what else can the reason be? For all of my analysis (check here), I haven't found the answers yet. And, mind you, this is even after farmer groups have come forward to openly demand metered quality power supplied by private players.

And, the KERC quietly removes the mention of privatisation from its web-site!!!

Talking of Manivannan, he had himself stated more or less that privatisation is the only way out (at least as far as power supply is concerened) - check my posts of 18-07-2011 and 17-06-2013 (scrolling above), as also the debate here, where he himself has posted enough comments.

Whatever, nothing is going to stop me from attempting to make Bengaluru too "gen-set mukt". Want to join me in furthering the matter, may be through a PIL?

Muralidhar Rao
dvsquare's picture

I am there to support "gen-set mukt" Bengalooru

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4 users have liked.

Hello Murali Sir,

I am all with you to make gen-set mukt bengalooru.

You are talking about big cities like Delhi and Mumbai, let me talk about small town/city - Ujjain (M. P.), my native near Indore.

There is no issues about power-cut there at all, power goes off rarely there. My dad had thought about putting a small inverter/battery for some power-cut issues, but he didn't go for it, because he was worried when power doesn't go off so often, how will inverter run and battery will recharge?

See the way people are thinking in my hometown against even small inverter, where power doesn't even go off so often.

So, here I am asking how to make BESCOM responsible for power-cuts, if they use any faulty instruments or what are the reasons for so many power-cuts multiple times in day.

About privatisation, I am not so sure, because we have seen Delhi cases, how private companies looted govt and consumers.

But count me in for my support to make Bengalooru a "gen-set mukt" city.

thanks
Deepak

murali772's picture

enough checks in the Delhi model

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7 users have liked.

About privatisation, I am not so sure, because we have seen Delhi cases, how private companies looted govt and consumers.

I don't know what "loot" you are talking about. Is it the matter of poor quality Chinese meters? Even if true, the scales are far lesser than what goes on today under BESCOM or any other govt run ESCOMs in most places across the country.

And, in the Delhi PPP model, the state govt holds 49% equity, meaning they have enough representation on the board, providing for all the necessary checks, apart from the role of the regulator. For all of that, it may still not be totally clean; but, far more so than what you have currently.

As for Ujjain, a state run ESCOM supplying power may be satisfactory. But, for a city like Bengaluru, that's supposed to be the tech capital of the country (and, perhaps emerging as a global leader too), we need 100% reliability, as well as constant upgrade of systems, which a state run utility is plainly not quite capable of managing.

Muralidhar Rao
murali772's picture

should there be a tariff increase at all now?

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5 users have liked.

Perhaps, like HERC, KERC should also be considering a downward revision in tariff. Let's demand that.

Muralidhar Rao
dvsquare's picture

What is the next steps?

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6 users have liked.

Murali,

What should be next steps?

What is to be done to make these govt run agencies accountable?

It rained 2 days back, and we didn't have power the whole night, more than 12 hours.

Apart from that also, many a times we have power cut more than 3-4 times a day, which definitely means low quality equipment, no timely upgrades and what not, and at the same time, we do pay on time. If we don't pay on time, the officials come before next bill date to disconnect connection.

Deepak

 

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