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Five Years of Privatization of Electricity Distribution in Delhi - Success Story of BSES, Shri R V Shahi, Former Secretary, Ministry of Power

India Energy Forum organized; on 26th July 2007 at Delhi, a detailed discussion on the issue of "Five Years of Privatization of Electricity Distribution System in Delhi". On a similar theme the India Energy Forum had organize a presentation by NDPL (Tata Power Group Company) which manages the electricity distribution of North Delhi. In my weekly column I had written about the success story of Tata Power in Delhi on May 25, 2007. In the same discussion forum it had been suggested that since larger part of electricity distribution in Delhi was handled by the BSES Group, through two of their companies, it would be appropriate that a similar presentation was facilitated by the Urja Vichar Manch of India Energy Forum. Accordingly the presentation on 26th July was organized. It was attended by a large number of energy experts and other professionals. Shri Lalit Jalan, Chairman BSES, Delhi and Director Reliance Energy made a comprehensive presentation on the subject.

Delhi at present has a total peak demand of the order of 3600 MW (average of 2006-07). Of course during the last summer, the peak touched almost 3, 900 MW. The overall consumption of electricity in Delhi during 2006-2007 was about 20 billion units. Approximately 70% of electricity supply in Delhi is under the jurisdiction of the two companies of BSES and about 30% under the jurisdiction of the NDPL (Tata Power). The following Table gives the details of the power consumption profile in Delhi and relative jurisdiction of BSES and Tata Power:

S.No. Particulars Unit BYPL BRPL BSES Delhi NDPL Total
1 Area sq. km 200 750 950 510 1460
2 Total Registered customers Lacs 10.46 12.20 22.66 8.5 31.16
3 Peak Demand MW 941 1554 2495 1050 3545
4 Consumption per year MU 5200 9100 14300 5700 20,000
5 Employees Nos. 3312 3906 7218 3600 10,818
6 Customer density Cons/ sq. km 4230 1360 1964 1667
7 Revenue (as per ARR for 2006-07) Rs. Crs. 1301 2537 3838 1915 5753

Over last 50 years, Delhi had accumulated several problems in the area of electricity distribution Consumers were fed up. Therefore, it is obvious that when a major change is effected by way of transferring the management of Delhi distribution from Govt. to be under the control of private sector companies, there would be expectations all around for a quick revival and turn around. The following chart presented by the chairman of BSES, Delhi highlights the major expectations of various stakeholders.

Initiatives By BSES Companies

Important highlights of initiative and actions taken by the BSES companies in last five years are summarized below:

In the area of customer care several consumer friendly initiatives have been put in place. Some of them are mentioned below:

  • 24 Hours - Seven Days Supply Helpline with a number of telephone lines for each of the two companies.

  • Seven days 12 hours commercial helpline to respond to the problems relating to billing and payments etc.

  • State of the art be-lingual Call Center.

  • Dedicated key customer support cell with interactive voice recording system with designated telephone no's which have been notified.

  • Dedicated theft helpline numbers notified for each of the two companies.

  • State of the art Customers Care Centers (33 nos.).

  • Dedicated key customer counters for high value consumers.

  • Duplicate bills facility with bar code at all locations.

  • A more consumer friendly bill format, as compared to the old format which was hard to understand in terms of the required information.

  • A large number of payment options have been introduced which include 220 cash collection counters (8 am to 8 pm), 225 sky pack Drop Boxes, 600 Easy Bill outlets (free of charge), payments collection through ECS & ITZ Cards, pay by phone (24 hours into 365 days) through sms/ phone / internet), 177 Drop Boxes installed at Resident Welfare Association premises, five mobile cash collection vans, etc.

  • The website has been enhanced in term of coverage and quality with new features like online bill, customer information, online bill payment, energy calculator etc. The website has also been provided with the facility of complaint registration online.

  • Within 2.5 Kms from any of the consumer there is an establishment of the company - either customer care center, or customer counter. Besides, mobile customer care vans have also been deployed.

In order to improve the quality & reliability of power supply, during the last five years, over Rs. 3,000 crore of investment has been made for the augmentation of distribution network and other related facilities. The following table would summarize the amount of work that has been done:

S.No. EHV Capacity 2002-03 2006-07 (MAR) % Change
1. No. of Grids 103 117 14
2. No. of Power Transformer 244 313 28
3. EVH Capacity (MVA) 4899 6656 36
4. EVH Cable (Kms) 1037 1791 73
5. No. of Feeders (66/33 KV) 221 304 38
6. Shunt Capacitors (MVAr) 1383 2131 54

S.No. EHV Capacity 2002-03 2006-07 (MAR) % Change
1. No. of Distribution Transformer 7509 9151 22
2. Distribution Transformers Capacity (MVA) 4291 5795 35
3. No. of 11 KV Feeders 1209 1608 33
4. 11 KV Lines and Cable (Kms) 4609 5536 20
5. Total No. of LT feeders 25412 30817 21
6. LT Lines (Kms) 9971 11548 16

In order to further improve the reliability and quality of power supply the top class automated SCADA and GIS systems have been put in place and are being put in place, whenever not done already.

The state of art SCADA Control Centre, situated at Balaji Estate in South Delhi's Kalkaji area and resembling a futuristic space centre with massive screens monitors power distribution system and supply on a real time basis in BSES licensed area. Any abnormalities in the system are immediately flagged and corrective action taken

SCADA is a giant leap in BSES efforts to automate the total process of electricity management. When fully implemented, the system will integrate SCADA - GIS - DMS and SAP Operations. This will lead to a quantum leap in operational efficiencies.

The entire electrical network is being mapped through GIS. This along with SCADA is leading to quicker fault locations and speedy redressal of faults. The integrated outage management system, running over Geographical Information System (GIS) will help identify affected areas on geographical map and will facilitate the maintenance crew with route maps, network details for faster response time.

Complaint Management System

  • BSES has a unique Fault Management system which ensures that the `No Supply' complaints lodged by a consumer gets addressed quickly and consumer feedback is also institutionalized as part of the process.

  • BSES had inherited very primitive consumer care facilities in July 2002. Each of the divisions now has an online consumer care center, each handled by Customer Care Officers under the supervision of the Local Business Manager.

Programmable Street Light Controller Project of BSES

To ensure remote operation of Street Lights for effective energy conservation, BSES has embarked on an innovative project to automate streetlights in its area. The programmable Street Light Controller (PSLC) project is based on Sunset/ Sunrise timings. The microprocessor controlled system - is very sensitive and automatically Switches On/ Switches Off the streetlights based on the day's Sunset and Sunrise timings. The projected, initially a pilot, is being implemented in parts of South and Central Delhi.

For the prospective customers several steps have been taken to see that the waiting time for getting new connections is substantially reduced. It used to take more than 45 days on an average to get a new connection. This has been brought down at far with the norm fixed by the Regulatory Commission which varies between 7 to 3 days, depending on the situation.

It may be recalled that prior to the privatization initiative the Delhi power supply situation could be characterized by age old network, high theft and high loss levels, high equipment burnt outs, and outdated technology, and above all, virtually non existent customer care approach & activities. Annual financial loss reached a staggering figure of Rs. 1200 Crores. The aggregate technical and commercial loss (AT & C loss) was as high as 62% in the case of East Delhi (now BSES Yamuna) and over 47% in the case of South Delhi (now BSES Rajdhani). These were the figures which were indicated but the actual loss levels were as high as about 63% and 52% respectively for the two companies. As compared to the targets provided and promised in the tender documents, the achievements of reduction in AT&C loss have been significantly high, of the order of absolute 24% in the case of East Delhi and absolute 22%in the case of South Delhi. The following graphs highlight the extent of achievements:

As a matter of fact, if this major reform initiative had not been taken, both AT&C loss and financial loss would have further increased. But even if we take the loss levels of the base year 2001-02 as a reference (and ignore the inevitable further increases which would have happened) the savings effected post privatization accumulate to more than Rs. 3,800 crores in the five years period. Absence of this saving would obviously have come from the Government of Delhi as a burden on them. The current level of saving is of the order of Rs. 2,200 Crore per year as highlighted in the chart given below; which could have been an extra burden on Government from the tax payers money.

The presentation which covered almost all the relevant issues was followed by a number of comments and observations from the participants. Some of the critical comments which were made are summarized below:

  1. During the initial 2-3 years, complaints mainly on account of excess billing assumed a disproportionate dimension in respect of the two BSES companies. The general feeling was that meters fixed were fast and recorded larger consumption than actual. Another feeling was that the computer systems used by these two companies were also leading to excessive billing. As a result, there was a widespread resentment against the whole exercise of privatization.

  2. The general assessment of consumers at large was that the efficiency of operations, attention to consumers and over all approach in the case of Tata Power has been better than in the cases of two BSES companies. This in turn, led to better results and quicker turn around in NDPL (Tata). This perception is shared by a large cross section of people, press and media.

  3. While these two issues relate to only the two BSES companies, there are couple of important issues which are common to both BSES and NDPL. These had also been emphasized in the discussions when Tata Power had made their presentation on 25th May 2007.

  1. Both these companies have been unable to do anything significant on capacity addition which is so badly needed to cope with the ever increasing demand of power in Delhi. Both of them knew that after March 2007 it is not the Government of Delhi Transmission Company which will have the obligation of supplying power to them but they will have to organize on their own. This has been an area of serious concern.

  2. While the performance indicators are impressive - NDPL far exceeded the targets of loss reduction, BSES companies have also exceeded the targets, financially there have been savings to the State Government, almost Rs. 4,000 crores of capital expenditure have been incurred by all the three companies to augment and modernize the distribution network, several initiatives have been taken to improve the quality of service to the consumers, most of the facts have not been highlighted through various means including through media to present to the public the true picture of the situation post privatization. In fact, the general perception is just the opposite. In a survey of 10,000 customers conducted in Delhi by DERC, BSES companies ranked higher than NdPL on all major customer care parameters.

In response to the above major critical comments and observation, the clarifications given by BSES representatives were as follows:

  1. The problem of billing and meter related complaints were also genuine Customers did face difficulties on account of new software systems which were introduced. They were also partly because of the reasons mentioned in (i) above. These are, however, matters of past and now these problems are way behind us.

  2. Inspite of best intentions and efforts, new generation capacities could not be created in Delhi because of several constraints including availability of land & fuel. This has been the case for both BSES companies and also Tata power. Efforts on the part of these companies have not been wanting.

  3. Communication through various means including media has been an issue. Some efforts had been made, but perhaps there are gaps on this score. The overall picture of success of the initiative of reform in Delhi is not emerging the way these achievements deserve. This is an area where definitely more thoughts and actions are needed. There is also a need for better appreciation and cooperation from all the stakeholders.

From these discussions it is quite clear that though the outcome of the reform process has been slow, the process is in the right direction. At least this has created some benchmarks. People of Delhi can compare performance of one company with the other. The process of tariff fixation goes through an elaborate and transparent mechanism. Several institutional arrangements are in place for redressal of complaints. Though the advantage of full competition is not available but the advantage of benchmark competition on performance is definitely on the positive side. Financial discipline of working of this sector is definitely a good outcome of this initiative. What generally is seen and commented is what has not happened. But we fail to really recognize what good have happened and also the consequence of continuing with the previous model, that is, what would have happened if this reform initiative had not taken place. It would, however, be necessary to state that a few areas of concern highlighted above will need continued attention and vigorous efforts. No new initiative of change of this dimension will ever have no problem. Pluses and minuses are always there in every such change. What is important is to evaluate these whether, on balance, the outcome is positive and in the right direction.

With these presentations first by Tata Power and then by BSES companies, the broad picture that emerges in the presentation is as follows:

  • Overall savings to the Govt. of the order of Rs. 6,000 Crores.

  • Capital Expenditure of Rs. 4,000 Crore to augment distribution network and other facilities.

  • Overall Loss (AT&C) Reduction of average 5% per year.

  • A number of Customers related facilities.

  • Financially after the five years period now self sustaining sector.

Areas which will need continued attention would include:

  • Local generation capacity to be set up.

  • Regular updating and upgrading of Distribution network to meet 8-9% growth in load (demand).

  • Continued focus on improved customer service.

  • Reduction AT&C Loss, particularly theft.

  • Introduction of best technology.

  • Organized communication with people through various means including press and media.