Delhi Govt Flayed For Creating Monopolies

New Delhi: | Updated: Nov 17 2003, 05:30am hrs
A study conducted by the Centre for Civil Society (CCS), a think tank for public policy solutions, has come down heavily on the Delhi government for privatising power distribution which has led to the creation of private monopolies and over-burdening of consumers.

The study alleged that instead of creating healthy competition for power distribution among private players, which could have benefited the consumers, the Delhi government had created private monopolies, ignoring the study conducted by an expert group on behalf of the government.

Tata Power and BSES have been given monopoly over distribution in separate areas leading to monopoly without fair competition, the study said. The public sector generation company, Genco, sells power to the transmission company, Transco at Rs 2.50 per unit and Transco, which is a public sector unit, sells power to Tata Power and BSES at Rs 1.47 per unit, which is below the purchasing price. Hence the loss is being borne by the government or the taxpayers, says the study. Besides, the assets of the Delhi Vidyut Board, valued at Rs 3,160 crore (book value of unaudited accounts) was sold for Rs 2,360 crore to the new owners, it said.

The study said till 1997, the Delhi Electric Supply Undertaking (Desu) was a part of the Municipal Corporation, Delhi, responsible for generation, transmission and distribution. In 1997, the Delhi government made DVB a successor to Desu and placed it under its control.

The privatisation process started in February 1999 when a strategy paper was issued by the Delhi government identifying the problems of the power sector and emphasising the importance of restructuring DVB. It argued that huge financial inputs were required to improve the situation.

The Delhi governments cited reasons for privatisation were that transmission and distribution (T&D) losses of DVB increased from 7 per cent in 1953 to over 50 per cent in 2000. Between 1995 and 2001, T&D losses ranged between 40 to 50 per cent. DVBs losses increased from Rs 207 crore in 1993 to Rs 1,103 crore in 2000. The billing system did not work efficiently. For example, 57.3 per cent of the energy released in 1998 was billed and only around 88 per cent of the amount billed was received as revenue. Because of continuous losses, on the eve of privatisation, outstanding accounts stood at Rs 6,500 crore and DVB itself was owed over Rs 1,000 crore from various organisations. These facts clearly show that losses increased due to inefficient management ever since the power generation and T&D were brought directly under the Delhi government through creation of DVB, the study said.

The CCS study identified yet another problem area the demand-supply imbalance. In spite of the installed capacity of 700 mw, DVBs generation units could not provide more than 300-350 mw. Most of the generation units are old and run on outdated technology. In 1994 and 1995, the government made an offer for private participation in power generation but failed.

The CCS has within its fold eminent experts, like Kanwal Rekhi, Parth J Shah, I G Patel, Suresh D Tendulkar, Jagdish Bhagwati, Meghnad Desai, Kirit Parikh, Isher Judge Ahluwalia among others.