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Sunday, Aug 15, 2004

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Delhi's discoms

Raghuvir Srinivasan

IT IS now two years since the high-profile privatisation of the Delhi distribution circle, where the two heavyweights, Tata Power and Reliance Energy, partially own and operate the distribution companies (discoms). The success of this experiment is critical to the future of reforms in the distribution segment.

Even as the two operators are the most experienced from the private sector in electricity distribution, the Delhi circle typifies the problems afflicting the segment all over the country. With high energy demand (3,400 MW) and low capacity (450 MW), aggregate technical and commercial (AT&C) loss of around 55 per cent (prior to privatisation), chronic pilferage of power, un-metered connections and so on, the Delhi distribution circle was a good place to start the privatisation experiment. If it succeeded here, well, it would in other places too. With the none too good experience with Orissa's privatisation hanging like a sword, the Delhi Vidyut Board handed over two circles to Reliance Energy and one to Tata Power through a bidding process.

Two years down the line, the results are encouraging. North Delhi Power of the Tatas has been successful in surpassing the targets set for its AT&C losses in the privatisation agreement while BSES Rajdhani Power has just about been able to keep to the commitments. The third discom, BSES Yamuna Power still has a AT&C loss of 54 per cent which means that progress has been limited — the losses at the time of privatisation in this circle was 57 per cent.

Under the agreement, the returns for the discoms are linked to the reduction of AT&C losses with an incentive for surpassing the target. BSES had committed to a reduction of 17 per cent in the two circles within the first five years. It has managed to bring down the loss from 48 per cent to 45 per cent in the South Delhi circle.

North Delhi Power, on the other hand, had AT&C losses of 51 per cent in its circle which has now been reduced to 45 per cent, better than the target of 45.35 per cent set by the regulator. The company has also fully invested its committed amount of Rs 287 crore for capital expenditure in 2003-04.

Much of this investment has gone into improving the system by installing more, state-of-the-art sub-stations, transformers and in supply line network. The company has also provided electronic meters to consumers free of cost and improved services in its coverage area, whether for fault reduction and correction or for bill payment.

The three discoms have also reduced their manpower through VRS schemes — North Delhi Power has reduced its workforce by 40 per cent to 30,000 employees and BSES by 4,500.

Delhi's privatisation experiment appears to have begun largely on the right note though there is a lot of ground to cover yet. This is probably inevitable given the complexities in the three circles and tough problems.

What is important though, is that the consumers have begun to notice and appreciate the superior services now.

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