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Privatization of Electricity Distribution in Delhi: Many Unknown Facts about NDPL (Tata Power) Success Story, Shri R V Shahi, Former Secretary, Ministry of Power

On 25th May 2007 India Energy Forum had organized an interactive session on Status of Power Distribution in Delhi - NDPL (TATA Power) Experience. This was a very well attended discussion with almost 30 senior experienced personalities from power sector, from other spheres of energy sector and also those who have interest in this field, actively participated. Since most of the participants were also consumers of electricity in Delhi, the discussions also inevitably brought out consumer angle, besides the issues of revival of the sector and a number of other technical and techno commercial aspects. The discussion did facilitate a critical evaluation of this great initiative taken by Govt. of Delhi five years ago. Shri Anil Sardana, who used to be the Chief Executive and subsequently Managing Director of the North Delhi Power Ltd. (TATA Power) and now, is a full time functional director on the Tata Power Board made a very comprehensive, convincing and lucid presentation.

Before, we go into the details of presentation and the discussions that followed; it would be relevant to give a brief background of privatization of distribution in Delhi. For power professionals, experience of power supply in Delhi has been an example on which we can never claim and feel proud that this was managed well over the years. In fact, similar has been the case in the entire sector. Power professionals in Electricity Boards continued to attribute the financial and commercial mess in the Board to agricultural power supply in particular and rural power supply in general. Over the years those incharge at the utility level continued reporting grossly inaccurate figures of T&D Loss; substantial portion of T&D Loss they continued attributing as if they were agricultural consumption. To a great extent for decades together they succeeded in doing so. The Planning Commission Annual Report presented for every State, the figures given by the State Electricity Board, T&D Loss to be in the range of 18-20%, while the fact was that they were always above more than 30% and in many cases more than 40%. In the case of Delhi, the scope for this type of manipulation of figures and putting the figure of theft and loss as agricultural and rural consumption was obviously limited. In no case there could be any justification for T&D Loss to be in the range of 50% to 60% in different zones of the city.

In fact, many people pretend as if they have forgotten the power situation prevailing prior to privatization initiative. I have seen and experienced Delhi power supply for more than 30 years both as a consumer during the maximum part of this period and also as one who, during early nineties, used to be on the Govt. of India constituted Task Force to monitor power supply situation in Delhi, and subsequently as Power Secretary of the Government of India for about five years (2002-2006). If we just analyze the situation during the period of four to five years before 2002 (the year in which privatization was done) the financial loss of the Delhi Vidyut Board continued increasing and within a period of five years it increased from less than 400 cores to more than Rs. 1200 cores per year. Distribution transformer failure rates were excessive in the range of 10-15%, as compared to less than 2% in Mumbai. Distribution transformer failure directly hits the power supply at the consumer level. As a Member on the Delhi Power Supply Task Force we often used to say those days that the distribution is so badly organized that power can be brought at the door step of Delhi from any part of the country but the Board would be unable to supply and reach it to the consumers. Obviously something was badly needed to be done. If nothing was done the loss which increased in a span of five years more then three fold to Rs. 1200 crores per year would have easily gone to more than 2,000 crores per year in the subsequent four to five year period. For the Governments, to continue to meet these ever increasing gaps year after year would have been virtually impossible. Delhi was also one of the large defaulters of NTPC, Coal companies and Railways for the power they purchased, the coal they bought and got it transported. Apart from failure rates in the case of distribution transformers, bursting and burning of electrical cables and conductors which directly affected the supply of power to consumers, were rampant. Financially the whole scheme of things was unsustainable. In the case of consumer services in electricity, quality and reliability of power is, no doubt, most important but equally important is also the response of the power supplied toward consumer complaints and grievances - they may relate to disruption of power supply or billing and payments or about their request for new connections. In all these matters, the situation which prevailed then can be better appreciated if we analyze the quantified statistics of those days and of now.

With this background, we may now focus on the presentation that was made and discussions which followed. Some of the important facts which were brought out in the presentation made by Tata power is summarized below:

  1. After a very brief over view of the business of TATA Group with particular reference to power sector the presentation brought out that for TATA's retailed supply of electricity at the LT consumer level, this was a new experience and therefore, they reoriented their perspective to electricity distribution business around the following approach, which constitutes the corner stones of their distribution business philosophy:

  • Consumer is the KING.

  • Consumer's requirement comes first.

  • Consumer Delight above all.

  • We are in business because of consumers.

  1. Except for very few electricity distribution companies in the country-hardly 2 or 3 of them, consumer orientation has been missing. This type of approach did bring freshness. I recall when I took over as the Chairman of Mumbai distribution utility, within a few weeks I came to the conclusion that electricity was being supplied to consumers more as a favour than as a service even by utility in the private sector. I admitted this in the following Annual General Meeting (AGM). This followed a series of initiatives to change the mindset of employees within the company. Follow up on these did make significant positive change. Therefore, the above orientation toward consumers, which was adopted by TATA Power, must be complemented and naturally with this type of approach a number of good things have followed.

  2. NDPL introduced a scheme called SUGAM containing the data base for 100% of their consumers. Consumers could see on their computers their bills, previous records of payment and bills etc. I recall again, in the year 2000, for the first time in India, in Mumbai the company website provided for four years data on billing and payments for each of the 21 lacs consumers. This initiative had been inaugurated by the then Union Power Minister Shri. Suresh Prabhu. In Delhi it was unheard off. NDPL deserves to be congratulated to have introduced this.

  3. They have introduced another Scheme SAMBANDH, which, through computer, facilitates management of consumer complaints. Each complaint is given a number and it is followed up till the complaint is fully redressed. The consumer can also track the status of progress on redressal of the complaint.

  4. Several new and innovative methods have been introduced for making payments of electricity bill, including payment through website.

  5. The presentation brought out that in July 2002, when the distribution was handed over to them, there were hardly 20 avenues for making payments. Now, more then 1100 such avenues exist.

  6. They have also set up cash collection KIOSKS which are available on all the week days for 24 hours.

  7. NDPL has the philosophy to make improvement on the basis of valuable feedback which is received from consumers. They try to obtain feed back on following parameters.

  • Quality and Reliability of electricity supply

  • Quality of Fault Repair Personnel

  • Quality of Metering and billing

  • Quality of Payment process

  • Quality of complaint/ query handling by the Call Centre/ Help line

  • Quality of complaint/ query handling by the Customer Care Centre/ Client Manager

  • Quality of Relationship building initiatives

  1. One of the most remarkable achievements of this period has been drastic reduction and unbelievably excellent performance on reducing the transformer failure rates. In 2002 the transformer failure rate was 11%, during 2006-07 it is as low as 0.75%.

As a part of the Agreement based on the tender conditions the minimum loss reduction in respect of Aggregate Technical and Commercial (AT&C) loss was required to be a total of 17% (absolute), in a period of five years. NDPL has succeeded in reducing the loss by 29.3% (absolute) by bringing down AT&C loss from 53% to 23.7%. This performance is even more remarkable. I am confident that in next 2 to 3 years, they would succeed in bringing it down further to less than 15%.

  1. Obviously, such a drastic reduction in losses has helped in improving the revenue collection. During the year 2002-03 the annual revenue collection was of the order of Rs. 821 crores, it increased to 2020 crores in 2006-07.

While the revenue has improved at a compounded annual growth rate of 16.5 percent, it may not be inferred that it is on account of tariff increase, which has been of the order of 4% compounded annual growth rate.

  1. The company has engaged A.C. Nelson, a highly reported agency, to carry out survey of consumers on a quarterly basis. The feedback is used to make improvement. The company has also introduced another initiative of Eminent Citizen Charter Group, which consist of 300 important personalities from their area of power supply whose feedback and suggestions the company values. This initiative of involvement itself removes a lot of problems arising out of gaps in communication, as also serves as a good platform for getting suggestions for improvement.

  2. One of the very novel methods of interacting with the consumer families is the Life Science Courses organized by NDPL, free of cost, under which more than 1,25,000 students have been provided training and education programmes, Besides, they are also assisted in doing summer projects.

These are all highly positive and satisfying outcomes. But at the end of the presentation, the discussions, that followed highlighted two major areas of concern - (A) if such excellent results have been achieved, have we not failed in not projecting appropriately to a large cross section of Delhi citizen as also to the country as a whole about this success story? Why is it that quite often, inspite of these results, only the negative aspect is being highlighted and people believe these to be true? Delhi privatization was historic because a different model has been tried here. People thought that if it succeeded, there would be pressure all over the country for duplicating and replicating this model. We don't find this type of an urge. On the contrary what is being projected is that privatization exercise in Delhi has failed; in any case, it has not brought out the results one would have expected. These questions belong to the challenge of removing the gap between the truth and the perception, if this is the truth as has been presented. The second set of concerns is about the failures of the distribution companies to do anything in creating new power generating capacities for an ever increasing demand of electricity in Delhi. Even after privatization, is it the government which will keep organizing the additional capacity for power supply or is it the responsibility of the private companies to prepare in advance not only to meet the present shortage but also take care of the future increasing requirements ? Every summer and winter the same situation of shortage is eclipsing even the good things which have been done and positive results which have been achieved.

Around these two major themes very detailed debate followed. Almost all the participants took part. It was unanimously felt that the distribution companies, professional institutions, professionals, government agencies, and regulatory commission all have to, in a coordinated manner work toward removal of the gap that exists in what is the correct position and what is being projected. It was the unanimous view that what has been done or is being done on this front is not enough. We must approach respected and credible writers of important news papers as also those in the electronic media to change the perception by disseminating the correct picture.

On the second issue, the clarification given by NDPL representative meant that, for the private sector, unless an approach that has been followed by the government in the case of Ultra Mega Projects, through formation of a Shell Company, which should facilitate resolution of the preconstruction problems, is adopted, matters like land allotment, land acquisition, possession of land, water linkage, coal block allotment, coal linkage etc. are extremely difficult for a private company to successfully organize, in any case, organize them in a time bound manner. This is difficult even for a well established group like TATA's. They have been trying to setup power projects for Delhi, in or around Delhi for last 3 years, but have not succeeded in tying up these important inputs. Participants while appreciating this did convey that the concerned companies must ensure new capacity addition and power availability if we have to bring credibility to privatization of distribution or else good work done, as very well articulated and presented by NDPL, could get eclipsed because of the problems that serious power shortage creates.

This interactive session only focused on NDPL (Tata Power). We need to discuss also the other two companies in Delhi on what they have done. Perhaps Indian Energy Form could organize a similar discussion on them.

NDPL in Delhi does make a good case on improvement and vindicates the initiative of the Govt of Delhi. But, it continues to be a tough job for them. If in power sector we have to improve, and provide to consumers what they always deserved, we need to bring, in a bigger way, competition, which means more players. At the consumer and public level, if we do not create conditions to facilitate competition then government initiative alone would not be adequate. We must recognize that there are not many takers of electricity distribution business. Industry feels that there are better options for them. At consumer level, also we need to do some self introspection. Consumers can't take a position that they would indulge in large scale theft of power, and it is somebody else's job to find these people out, and yet expect that the system should work in a smooth and sustainable way to deliver the best service to consumers. If loss in Mumbai could be 10-12%in in Ahmedabad about 10%, in Andhra as a whole, in most of the towns below 15%, why Delhi should continue with this massive theft and still have a loss at 30-35% and even in better managed area by Tata Power at about 24% ? Who is hurting whose interest? The latest amendments in Electricity Act 2003, which facilitate ruthless action against those who indulge in theft and also those who abet, must be used by the company and the state government to see that this issue is fixed for ever. Companies must put their acts together; consumers must also co-operate.