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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
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
murali772 - 22 May, 2009 - 12:18
Cadambi avare'
You have stated "The only way i see out from this mess is giving more autonomy to Escoms and promoting energy effeciency at the same time."
The state has a bigger role as the facilitator and regulator, and when it becomes a player in addition, this bigger role gets compromised. Besides, the state can rarely be an efficient player. Further, if it's a monopoly situation (like with power distribution), it becomes the epicentre of all kinds of racketeering.
Your point about proper regulation is indeed true. In fact, the KERC today is acting more like a consumer forum than a regulator. However, private sector participation in distribution in the country is not something new, and unlike in the bus transport services sector, it is the organised sector players that are there in the picture. I expect between the lot, they will set right the anomalies soon, particularly given the improved political climate, and hopefully we will all be able to do away with our gensets, inverters, converters, candles, match-sticks, and what have you, in the not too distant future
Muralidhar Rao
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
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