Power supply in Delhi, we may recall, used to
be a matter of serious concern not only for the people who lived in Delhi,
including me, but also for power professionals, Government Administrators,
politicians and media. I remember the days when the DESU (Delhi Electric Supply
Undertaking) was the organisation handling generation, transmission and
distribution of electricity. All of us in the power sector and also those in
policy making levels in the Government felt highly disturbed that we were not
able to fix the power problems even in the capital city of the country, let
alone the whole country. The nature of supply of power was so unreliable and
erratic that, at the request of Government of Delhi, Ministry of Power had set
up a Task Force to monitor the supply of power in the city with a view to
providing necessary co-ordination with different concerned agencies. As
Director (Operations) on the Board of NTPC, I was also a Member on this Task
Force during the period 1991-94, till the time I moved to Mumbai as Chairman of
BSES. The analysis during these deliberations of the Task Force used to reveal
that power could be brought at the doorstep of Delhi from various generation
sources, but the real problem lay in the distribution system.
It is a fact that Delhi always received top
most priority in the matter of allocation of power. But, if the distribution
systems were poor and outdated, and if the people handling distribution were
least concerned in ensuring reliability of supply through proper upkeep and
maintenance of the system, there was little scope to improve. Therefore, the
job of monitoring by the Task Force began and ended with the attempt at ensuring
adequate supply of power from various sources, getting required amount of coal
for power plants which supplied power to Delhi, and for doing so, arranging
railway transportation, so that power plants were not starved of the fuel. When
it came to addressing the issues of distribution, the intervention by the Task
Force, as a matter of fact, made little difference. We found that the failure
rate of distribution transformers was more than 20% annually. For well run
distribution utilities like BSES it would be less than 1%. On the top of it,
time taken to repair or replace these failed distribution transformers used to
be enormously long. Bursting of cables used to be a regular phenomenon.
Substations, Distribution Transformers, Cables, all needed to be upgraded
because they were excessively overloaded. Thus, failure of distribution
transformers and bursting of cables, together with not so responsive approach of
employees and engineers to set them right, scripted the entire story of Delhi
It would be appropriate to also highlight the
commercial and financial status of DESU. It is not that only technically the
organisation suffered from almost all types of inadequacies, resulting in
avoidable hardships caused by supply disruptions to consumers, but also
financially the health of the organisation was very poor and ever
deteriorating. Net loss of Delhi Vidyut Board (DESU was subsequently converted
into Delhi Vidyut Board) was Rs. 200 Crores in the year 1990-91, it increased to
Rs. 500 Crores by 1995-96 and further to over Rs. 1200 Crores in the year
2001-02. If the initiative of privatising Delhi distribution had not been
taken, we could be right in assuming that the annual loss, which more than
doubled in a period of five years to more than Rs. 1,200 Crores, would have
again more than doubled in the subsequent period of five years to over Rs. 2,500
Crores in the year 2006-07. It needs to be recognised that these losses meant
financial burden to the Government of Delhi which kept subsidising the
efficiencies of the Delhi Vidyut Board.
The financial condition had worsened so much
that Delhi Vidyut Board owed substantial amounts of money to almost every
organisation which supplied goods and services to DVB. It was not able to pay
to Badarpur Thermal Power Station, nor fully to NTPC power plants, nor to coal
companies which supplied them coal and nor to railways which would transport
coal to their power plants. Thus, conditions were chaotic technically,
commercially and financially. The aggregate technical and commercial loss in
electricity distribution, which captures the difference between power which is
procured and power for which payments are realised from customers, was 22% in
1991, rose to 48% in 1995-96 and further to 53% in 2001-02. This was the
average for the entire distribution area of Delhi. In fact, the distribution
loss in Eastern Delhi was as high as 63% (corresponding figure for BSES Mumbai
was about 11%). Thus, the situation had reached a stage when everyone was not
only feeling uneasy but also a radical reform, involving structural changes, was
the desire of all concerned. What was missing, however, was the political will
and determination to face all types of odds and drive the change process.
The issue started getting right focus and
priority in 1999 when the new Government took over in Delhi with the Chief
Minister Mrs. Sheila Dixit in the driving seat for a long drawn change and
reform initiative. Apart from a few other organisational changes that were
initiated, she took a bold decision that nothing short of privatising
Distribution might be able to make any significant dent and bring about a turn
around. By the year 2000, reasonable amount of feedback on Orissa electricity
distribution privatisation was available. I was personally associated, with
Orissa initiative, right from the beginning, as Chief of BSES, which took over
two companies. Orissa exercise had thrown up a number of lessons. With
reference to the process of privatisation, which was started in Delhi, we made
substantial contribution in structure and architecture of this initiative to
ensure that this exercise succeeded.
It took more than a year and finally Delhi
Distribution, restructured into three Distribution companies, was privatised in
July, 2002. Two companies were taken over by BSES and the third by Tata Power.
It is about eight years since privatisation. Initial two to three years were
very difficult; and we did expect that visible and significant positive impact
of privatisation would be available in not less than five years or so. In the
past, I have written couple of articles - one each on Tata Power controlled
company and on BSES controlled companies. This paper presents a brief picture
after eight years of privatisation and it highlights how this initiative has
been so successful, satisfying and rewarding.
Before we analyse the outcome, it will be
relevant to briefly take stock of a few important steps which were taken by the
Government, Regulatory Commission and the Distribution Companies.
Delhi Vidyut Board was
restructured into five legal entities - Generation Company, Transmission Company
and three Distribution Companies.
A very imaginative and
facilitative approach followed by the Delhi Government was to ensure that all reorganised companies but with a clean slate, with all the unserviced
liabilities taken over by a Government holding company.
The five year projection of
input price of power, and transition period support by Government were all made
part of the direction issued by the Government, under Delhi Electricity Reform
Act, so as to address the concern relating to regulatory uncertainty.
Regulatory Commission has been
undertaking the exercise relating to tariff and issues concerning power
supply. This has stabilised the process and the ground rules.
Discoms have started
functioning on professional lines. Some of the important initiatives taken by
them include :
Augmentation of existing transformers to improve efficiency and
reliability of supply.
Load balancing of transformers and segregation of feeders aimed at higher
levels of reliability.
Replacement of mechanical meters by electronic meters .
Improvements in Billing systems through appropriate I.T. inputs.
Energy conservation measures including energy audits, Distribution,
Transformer, metering etc.
SCADA and GIS for improved and efficient service to customers.
Setting up modern customer care centres.
On line Bill access.
Multiple options for payment of Bills - Dedicated counters, cheque by
post, mobile cash vans, pay by phone, metro-drop box, net banking payment, Skypak drop box, Auto debit payment.
I.T. applications for improved service include SCADA, GIS, EBS, AMR, Call
Centre, OMS etc.
Under electricity the institutions of Ombadsman, and Consumer Courts have
led to improved resolution of bill related disputes.
New connection camps and I.T. based tracking of requests for new
connections have led to reduction in waiting time.
Several electricity theft control measures.
During Delhi Vidyut Board days the capital expenditure on Distribution
system augmentation used to be about Rs. 400-450 Crores per year. During
2009-10 the corresponding figure is of the order of Rs. 1,300 Crores.
Cumulative figure of capital expenditure to augment and modernise the system
since privatisation till January 2010 is about Rs. 5,800 Crores.
These efforts, post privatisation, have led
to several positive outcomes :
Financial health of Distribution is fully sustainable now.
Savings to the Government, as projected by the Delhi Government have been
of the order of about Rs. 20,000 Crores.
(Break up:- AT&C loss reduction - Rs. 11,700
Crores, Capital expenditure till 2008-09 - Rs. 5890 Crores, Loan pay back - Rs.
1,416 Crores and ( E Tax payment Rs. 350 Crores).
AT&C loss which was of the order of over 60% in East Delhi and 50% in
North Delhi and Central Delhi has reduced in all cases. Now the AT&C loss is in
the range of 15 to 20%.
Transmission capacity has grown by about 60%, transformation capacity by
Distribution Transformer failure rate which used to be over 15% annually
has reduced to less than 1%.
There is no default in payment to generation Utilities which supply
power. It has been 100% since 2003-04
Load shedding as percentage of total supply, which was as high as 5% in
2000-01, has reduced to about 0.6% in 2008-09.
Thus, there is overall improvement, and the
process continues. This has led to much more reliable power supply. On
balance, the initiative of the Government has not only succeeded but also it has
been a highly rewarding exercise.