Opinion Powering up
Central power reform has been slow. States show the way
The mid-term appraisal of the Eleventh Plan,which was put online without much fanfare and amidst much tweeting about the Twelfth Plan is a readable document,full of information and assessments. It is best on electricity just as its predecessor was on agriculture. According to the Planning Commission,The likely growth of supply in first three years of Eleventh Plan works out to 5.59 per cent,as compared to actual growth of 5.32 per cent in the Tenth Plan period. Now,India has the largest capacity in high-voltage DC lines in the world. The appraisal notes all this,but outlines the problems,too. Although the power transmission segment has been opened to private investment in 1998 there has been only a limited success in attracting private investment, they lament. I also cry since I was power minister in 1998 and managed the contentious transmission bill through a parliamentary committee unanimously. They go on to say that the only public-private partnership project the Tala transmission system has been operational since May,2007. This,though,is not true.
The first project was approved and implemented in the late 90s,but once that reform was given up,the memory of that investment seems also to have vanished. In 1997,FDI approvals reached Rs 25 billion from less than a tenth of that earlier and actual inflows reached around Rs 10 billion,from nothing earlier. Kandula Subramaniam notes that the the framework of this draft legislation was used to approve the first major private transmission private sector Mangalore project in India in 1997… The National Grid of the UK,which was to execute the Mangalore transmission project,is the only foreign utility company in India maintaining operations to date. That (the legislation) was cleared only in 1998,and to date there have been no private investments in the transmission sector. Foreign direct investment dried up in the period 1999-2005; already,by 2001,they were close to zero. Approvals declined to less than a tenth by 1998,and reached close to nothing by 2004,and so did actuals. Legislative policy failures have tremendous consequences. So do successes in political management.
Still,there are fascinating cases of reform. Utilities wishing to involve the private sector in reducing distribution losses may either go for privatisation of certain areas,or resort to franchise arrangement for services such as metering,billing and revenue collection. The major cities where distribution has been privatised are Kolkata,Mumbai,Delhi,Greater Noida (UP),Ahmedabad and Surat,as well as in Orissa. Transmission and distribution losses in cities managed by private companies are noticeably lower; the reported distribution losses in these cities in 2008 are: CESC,in Kolkata,14.3 per cent; AEC,in Ahmedabad,11 per cent; NDPL,in Delhi,18.5 per cent; CESC,in Noida,8 per cent.
More recently,initial results of the franchising process from difficult areas with large-scale power theft,like Bhiwandi in Maharashtra,are encouraging.
To me,new trends are visible in the power sector from what is happening in Bhiwandi and Agra.
The Uttar Pradesh government decided to hand over distribution in Agra and Kanpur to a private company on a franchise basis.
The Agra system is on and Ahmedabad-based Torrent has been awarded an input-based franchisee management contract,of a kind implemented in Delhi. Losses have to be reduced to 15 per cent in seven years.
This is India on the go. The authorities have accepted that they will bear some part of the costs of distributing electricity but,subject to that,the real cost of power will be charged from the consumer,with regulators checking the calculations. If the regulators do not meet transparency requirements,the private distributor can go to the court. There are a number of adjunct technological improvements planned,including IT applications in accounting,billing and meeting consumer grievances. Also the characteristics of special consumers will be monitored and used for management purposes.
And there are interesting practices being adopted by distribution utilities across India. In Delhi,an IT-based application provides a comprehensive and centralised record of revenue recovery from various consumer segments. Andhra Pradesh,similarly,has a customer information management and analysis tool; so does Bhiwandi,for monitoring,metering,billing and collection.
In Assam,rural distribution franchisees operate on behalf of the three distribution companies. Irrigation pumping loads are controlled by using programmable controllers,which can switch pumping loads in or out depending on the demand schedule so that theres continuous three-phase power supply to non-irrigation loads.
Reform at the macro level has been slow. But there are still,evidently,many interesting applications being thought of. Were there,at a political level,a bit of song and dance about accelerating reform,India could really take off.
The writer,a former Union minister,is chairman,Institute of Rural Management,Anand express@expressindia.com
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