HOT TOPICS
SPOTLIGHT AGENCIES
Power distribution to be privatised
Written By murali772 - 21 May, 2009
Bangalore governance Corruption Privatization Media Reports efficiency outsourcing
Taking a cue from its counterparts in Delhi and Mumbai, the state government is toying with the idea of handing over distribution of
power to private parties on a franchise basis. Currently, electricity supply companies (escoms like Bescom in Bangalore) do it.
"We are studying the Delhi and Mumbai models where private parties have been given franchises to distribute power. We propose to adopt such a model as part of power sector reforms,'' a senior energy department official said.
The move is seen as a bid to ensure better power supply at the consumer end and better revenue realization. "Once it's implemented, consumers will get uninterrupted power and it'll also lead to quicker repair of faults," the official claimed.
According to sources in the energy sector, the franchisee will purchase power from the state government (Karnataka Power Corporation) and sell it to consumers and will strengthen and maintain the distribution network. This system will not only address consumers' grievances but will also cut down the massive power pilferage, pegged at 22-27%.
Meanwhile, sources in the energy department said over 24 private firms, including Tata, Reliance, Essar and Torrent, are interested in the proposal, and the department plans to hold a meeting with their representatives shortly.
In Delhi, Reliance and Tata, after the initial hiccups, have been successfully handling power distribution on the franchise basis.
Initially, pilot projects could be launched in Bangalore. If successful, it will be implemented in other major urban and rural areas as well.
Allaying fears of power employees, a senior energy official said though the government proposed to rope in private firms, the concerned Escoms would have management control, with its employees involved in distribution. However, the government will allow corporates to employ their managerial teams to supervise the operation.
Besides, prospective private players with their professional approach would help reduce transmission & distribution losses. On the possibility of high tariff, the official said that under the proposal, private firms and the Escoms would share incremental revenue, and power rates would be fixed by the KERC.
The move has already enraged KPC employees. "Once the private company is given the contract, its only concern would be to maximumize profits and in the process, only those areas will get power where there are industries, as they would get higher revenue there," said a spokesperson of the KPTC employees association.
For the full text, click on: http://timesofindia.indiatimes.com/Cities/Bangalore/Pvt-cos-could-handle-power-distribution/articleshow/4557596.cms
I have been advocating this from ages - check here . And, it was inevitable that with a proactive bureaucrat like Mr Jairaj at the helm, this had to happen sooner than later. Even importing power from Chattisgarh, rather than importing coal from there and burning it here to generate power - check this ,are sensible ideas being pursued by him.
Strangely, however, Mr K S Eshwarappa, the Energy Minister, has denied such plans, though experts from TERI, spokesperson of Mysore Grahakara Parishad, etc have welcomed it. I expect the Minister, in typical politician style, is just waiting to see the reactions before announcing it himself. Whatever, credit is due to him for backing Mr Jairaj.
Muralidhar Rao
COMMENTS
What foxes...R our Engineers so incompetent?
Vasanthkumar Mysoremath - 21 May, 2009 - 07:01
If everything has to be outsourced / privatised to make the system work, will it not demoralise the learned highly paid officers and employees of ESCOMs?
With all these decades of working have they not understood the loopholes in their working system?
What attempts have they made to plug such holes and systemic failures?
There was a time when Karnataka was having the highest rate of 35 per cent transmission loss. Now it has come down drastically.
How did they do it? Could not they adopt such R & D and O&M parameters in other spheres of ESCOMs for improving the power supply scenario in the State instead of buying power at exhorbitant rates?
Outsourcing does not come cheap - will it result in better supply performance and help reduce power consumption to stem the rot in ESCOMs?
- Is somebody listening?
-Vasanth Mysoremath
California eletricity crisis is a reminder
mcadambi - 21 May, 2009 - 16:37
Improper deregulation is as disastrous as high regulation as well. Thankfully, the telecoms story in India is a poster boy of success when optimally deregulated.
Improper deregulation was what caused the California Electricity Crisis.
http://en.wikipedia.org/wiki/California_electricity_crisis
Unfortunately in India, retail prices of power are capped while wholesale prices are not leading to a situation similar to that of California.
Recently, BESCOM wanted to raise tarrifs by Rs. 1.10/- - but this was shot down by the Power Minister K S Eshwarappa.
Lets face it. Years of free TVs, subsidised rice, subsidised fuel are haunting us now. If we do not pay the power producers and adequately account for return on their equity invested in the respective projects, no one is going to invest in power generation.
Karnataka Thermal plants were blacklisted by coal suppliers because of the former's failures to pay coal suppliers on time.
In our nation, monopoly laws and competition laws are not stringent. Power distribution and tranmission companies in their quest to maximise profits will purchase power from where they find it profitable and will sell it to those they deem profitable.
This sometimes severly restricts producers of renewable energy since Escoms will only end up purchasing and hence providign incentives to gas and coal based producers.
Energy is a topic that is directly related to the environment and hence, unlike telecom the govt cannot abdicate it's responsibility in this crucial sector. Such costs to the environment do not appear in balance sheets or profit and loss statements.
At the same time, higher power tarrifs encourage energy intensity. When energy intensity and energy effeciency are encouraged, it is a very good situation for the environment.
The only way i see out from this mess is giving more autonomy to Escoms and promoting energy effeciency at the same time.
mcadambi - 21 May, 2009 - 16:42
http://www.livemint.com/articles/2009/02/25223336/Electricity-market-disorders.html
murali772 - 22 May, 2009 - 12:16
Vasanth avare'
Tata's and Reliance will pay more by way of salaries than the 'highly-paid' officers of BESCOM are presently getting. So, the sincere and honest employees would not be worried at all; on the contrary, they would be welcoming this move. So, there's no question arising of any demoralisation.
That said, however, the package they get will still be far lesser than the salary plus 'other'incomes that many of the employees are presently getting. It is these sections that are protesting.
The T&D (better defined as 'theft & dacoity') losses in Mumbai, Ahmedabad, Surat, etc, where distribution has from long been with the private sector, is far lesser than the level to which BESCOM has supposedly brought it down to. And, the reason is not any special technology or skill that they employ; it's plain non-interference by neta's, which can never be guaranteed when it's run by a government agency.
The whole idea of outsourcing is to improve efficiency. And, improved efficiency reduces costs.
And, yes, finally somebody seems to be listening, and listening to well-reasoned suggestions.
Muralidhar Rao
srkulhalli - 27 May, 2009 - 06:36
Mcadambi avare,
Sir, California is one example. But even there, the situation is far better than namma Bangalore, is it not ??? Look at how much T & D losses are their today, isnt that a big big impact on the enviorement, on our economcy.
I totally agree with you that blind privatisation will not work. It has to be done in the right policy and regulatory freamework. Similarly, blindly putting faith on govt. sector will not work either. We need to seperate out each responsiblities clearly.
Govt. job is to bring the right regulations. Can they not tax coal heavily, subsidise renewable etc. There are a number of ways to ensure this does not spiral into envioremental disaster, as you may be rightly worried. Once they give the framework, the private parties will innovate, bring their efficiencies and as long as the govt. ensure they compete on the RIGHT parameters, the system then takes care of itself.
Sir, your example of private players crossing paths is really weak. By your arguments, even the telecom should not have been privatised. If I call from Airtel to Reliance, Reliance will not have motivation to give good quality, is that not ? Buisness leaders have neccessary intelligence to ensure that they do not sacrifice the long term for short term gains. Beyond that the regulatory framework will take care.
Vasanth avare,
Signing documents does not a nation make. Our govt. and specially socialists and communists are great at ideals, a little off-track in translating into reality. You need to get your feet on the ground a little bit and see what works for the common man, aam admi. He should not suffer because of your ideologies, however noble they may be.
I will give you an example and close with this. My freind Shriram is a brilliant engineer and budding enterprenuer. He is a commited enviorementalist, and wants to see solar and wind energy get utilised in a big way. He also wants to break the monopoly of big energy and get it to a point where it is indivdualised. His idea is to have solar and wind on each rooftop, but really these are not available all the time. Problem with storage is it is inefficient (30% loss in the full cycle), plus batteries need to be changed every few years, making it have a high running cost, enviorementally unfriendly (battery disposal). His idea is to have different such homes hookup and have a distributed decentralised link up. Intelligence is built in every home setup, giving priorities (for lighting for eg:) such that a certain minimum always exists, plus everybodys needs are taken care of over the day. Its a fantastic solution which is economically viable.
The problem this runs into is govt. regulations. You cannot just distribute like that. Only govt. can do the job, and bescom officials think he is crazy. Babus at the top have fixed these regulations, thinking they know what is the best, that technology is stagnant, human creativity and ambition does not count for much. Shriram may be tech savy, but he is not a lawyer, not politically savy and cannot negotiate this labrynith of govt. So he does nothing and continues to work in a software job. Meanwhile our dear country continues to bleed, our enviorement continues to suffer.
Suhas
PRAJA.IN COMMENT GUIDELINES
Posting Guidelines apply for comments as well. No foul language, hate mongering or personal attacks. If criticizing third person or an authority, you must be fact based, as constructive as possible, and use gentle words. Avoid going off-topic no matter how nice your comment is. Moderators reserve the right to either edit or simply delete comments that don't meet these guidelines. If you are nice enough to realize you violated the guidelines, please save Moderators some time by editing and fixing yourself. Thanks!