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BESCOM performance

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The performance of various electricity distribution companies has been indicated by the power ministry.  BESCOM gets a rating of B+ which is third from the top.  The PDF cannot be attached as it exceeds the 1 MB limit for attachments.

According to the report,

The main objectives of developing the integrated rating methodology for the state distribution utilities are:
- To devise a mechanism for incentivising/dis-incentivising the entities in order to improve their
operational & financial performance.
- To facilitate realistic assessment by Banks/FIs of the risks associated with lending exposures to various distribution utilities and enable funding with appropriate loan covenants for bringing improvement in operational, financial and managerial performance.
- May serve as a basis for Govt. assistance to the state power sector through various schemes like RAPDRP,NEF, etc.

MoP has mandated Power Finance Corporation (PFC) to co-ordinate the rating exercise, which in turn has appointed ICRA & CARE to carry out the rating exercise. The exercise does not cover State Power/Energy Departments and private sector distribution utilities.

The parameters for the ratings are given below:

Sr. No. Parameters Weightage
1 Financial Performance 63
2 Audited Accounts 5,-12
3 Cross Subsidy 0,-2
4 Reform Measures - Unbundling & Corporatisation 0,-5
5 Regulatory Environment 15,-15
6 Forward looking parameters 5,-1
7 Incentive / Bonus marks 12
  Total score 100

The parameters give an excessive weightage to financial performance that is subject to different push and pull based on subsidy (Eg: more farm-based clients = more subsidy), political set-up in the state (Eg: Gujarat govt. may be more forward-thinking than others), political set-up in country vis-a-vis state etc.  Technical parameters like amount of wires insulated that prevent death / accidents by contact, transformers, underground cabling and so on should also be included.  Also, all discoms, including private ones should be included in future exercises to provide better benchmarking and higher goals.  This being the first time, experience would hopefully turn this into an annual, more fine-tuned exercise.

Four utilities, all from Gujarat, make the top rating of A+. The next two discoms have a rating of A.  Bangalore (BESCOM), Mangalore (MESCOM) and Hubli (HESCOM) all make up the third rung at various places with a rating of B+.  Our utilities would do well to set goals based on higher performers to reach A and ultimately A+ ratings.  Though some parameters may be outside the control of utilities, they have to lobby hard with the state political setup to get their needs fulfilled.


n's picture

For those interested, a more

195 users have liked.

For those interested, a more in-depth reading is available on "Performance Benchmarks for Electricity Distribution Companies in South Asia".

sanjayv's picture

interesting stuff

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I only read through very quickly, but the reports are interesting and worth a more detailed reading.  The huge weightage given to financials is certainly surprising.  I think it is high time more of these benchmarks and mnore detailed ones are published comparing ESCOMS, transport corporations and various other organizations.  As a society, our organizations seem to do a poor job of learning from each other, itherwise there would be a lot more such literature.

murali772's picture

Gujarat too planning discom privatisation

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The interesting part is that though the Gujarat discoms' performances have been rated highest, the government is seriously considering going in for privatisation, going by the following excerpts from a report in the Business Standard (click here for the full report)

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

@n  -  You had stated - Also, all discoms, including private ones should be included in future exercises to provide better benchmarking and higher goals.

Now, city and rural distribution functions have totally different characteristics, and consequently, they have to be managed separately. However, most states (including Karnataka) have clubbed the two together, in the process of unbundling, supposedly to provide for cross-subsidising (It has essentially provided them a handy alibi for inefficiency). As compared to that, most private sector operations are confined to cities, or load centres. As such, comparing the performances between government discoms and private players will give a distorted picture, totally to the advantage of the private players.

Though some parameters may be outside the control of utilities, they have to lobby hard with the state political setup to get their needs fulfilled.

Mr Manivannan could possibly tell you how difficult a job that is.

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