Monday_ 13th August 2007

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					                                                                          Monday, 13th August 2007
       Five Years of Privatization of Electricity Distribution in Delhi – Success Story of BSES

                                                                                   R. V. Shahi
     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 Executive 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:

                                                                      BSES                  Total
SN                Particulars                Unit    BYPL BRPL                  NDPL
1    Area                                 sq. km      200      750     950       510        1460
2    Total Registered ustomers            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                                 4230    1360     1964      1667
                                          sq. km
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.

                                    High Expectations !!!
                                     from key stakeholders

  1                                                                            3
       Government                                                                  Employees

• Customers’ interest                                                         • Continued employment
                                         • Quality of Power
• Reduced Subsidy                                                             • Protection of benefits
                                         • Customer Service
• Infrastructure for growth                                                   • Career growth
                                         • Accurate Billing

4                                   5                                                  6
      Bulk Suppliers                     Private Investors                                  DERC

 • Regular payments                 • Manage expectations                          • Protect consumer
 • Demand planning                  • Public-Pvt. Model                              interest
                                      Success                                      • QoS performance
                                    • Financial returns                            • Timely and accurate

      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
            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
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:
                                                                               Actual Opening
                                                                                   63.16 %
                                         BSES Yamuna
                                                                               Total Reduction
70.00                                                                               24 %
50.00                                                                 43.88





           2002-03       2003-04               2004-05               2005-06         2006-07

                     Attained      Incentive                   Bid

             Consistent overachievement of Bid Targets

                                                                               Actual Opening
                                                                                   51.54 %
                                         B S E S R a jdha ni

           47.40                                                               Total Reduction
                                               40.64                               22 %
40.00                                                                35.53

35.00                                                                                 29.92




15 . 0 0

10 . 0 0


           2002-03       2003-04                2004-05              2005-06          2006-07

                              Attained             Incentive         Bid
        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.

                                                       BSES Yamuna



                                          Savings –
                                           Rs. 1462
                 310                         Crs.



                           2002- 03         2003- 04              2004- 05              2005- 06           2006- 07

Sav ings ( Rs . Cr s .)       18                 162                 259                  453                569

                                         Total SavingsRs.3816 Cr.
                                       Currant saving at Rs 2200 Cr / yr

                                                       BSES Rajdhani

                                      Rs. 2354
                          2002- 03       2003- 04         2004- 05           2005- 06           2006- 07

Sav ings ( Rs . Cr s .)     136            262              432                625                 899
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:

   a. 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.

   b. 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.

   c. 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

             i.   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.

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

   i.   It is recognized and realized by them that frequent changes at the top level of
        management in the BSES companies in the initial years did lead to some problems and
        therefore the amount of attention that was required, particularly in these years, was
        perhaps somewhat lacking. The problems were also caused an account of the disputes in
        the Reliance Industries. It had its effects. In the last two – three years, these issues have
        been appropriately addressed. We have senior level executive for each of these
        companies and therefore, the achievement in last three years are particularly remarkable.
        Attempts have been made to make up the shortfalls and shortcomings particularly in the
        area of customer care.

 ii.    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.

 iii.   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.

 iv.    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.

Copy Rights : R. V. SHAHI

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