Delhi was the second state after Orissa to privatise the distribution sector. Since the transmission period ended three years ago, an assessment of Delhi?s power reforms experience would be in order, especially to see how far it meets the objectives of the Electricity Act 2003.
Electricity supply has marginally improved in the capital over the past five years. Delhi Transco Ltd has significantly improved its system availability and reduced load shedding. Load shedding has been brought down to 0.6% in 2007-08 from 4.9% in 2000-01.Peak demand deficit of Delhi, at 1.5%, is much lower than the national average of 12.3%.
Delhi, incidentally, has the highest per capita power consumption among the States and Union Territories of India. The per capita consumption of electricity in Delhi rose from 1,259 units a year in 2000-01 to 1,615 units by 2007-08. Delhi?s 3.33 million households consumed 16,328 Gwh of power in 2007-08.
A key objective of Delhi?s power sector reforms was to make the distribution sector financially sustainable. The Delhi Vidyut Board?s annual financial losses had reached a staggering Rs 1,200 crore when it was privatised. The discom had accumulated receivables against the sale of power to consumers of Rs 5,508.53 crore. Had reforms not been initiated, DVB?s losses would have worsened. Even if the loss levels of base year 2001-02 are taken as a reference (and ignore the inevitable further increases that would have happened), the savings post-privatisation would come to more than Rs 3,800 crore in the five-year period. The aggregate technical and commercial (AT&C) losses also improved from 52% in the pre-reform period to around 25% in 2007-08. For example, North Delhi Power Ltd (NDPL) brought down its AT&C losses to 18.31% in 2007-08 from 48.01% in 2002-03.
Since the projected load demand is expected to reach 11,000MW by 2021, the existing generation capacity in Delhi won?t be sufficient and the gap between core generation and load demand will rise. (?s peak energy demand in 2008-09 was 4,034 MW). Coal-based generation is not permitted in Delhi due to environmental reasons. Setting up gas-based power plants is the only option for the state.
Delhi power reforms, based on the PPP model, has created a sustainable partnership between the government and the private companies. The AT&C approach collates two different attributes that need different improvement strategies. Collection efficiency can be increased with better managerial skill, but a reduction in T&D losses requires planned investment in infrastructure. In the coming maturation phase, attributes like service quality and planned capital expenditure can be introduced. This model can be replicated in other sectors within Delhi.
The future challenges of managing efficiency and equity in this sector shall require specialised skills and expertise. The role of regulatory commissions shall be more on driving the market. In this context, the commission expertise to forecast future sustainable strategies shall be crucial. Delhi Electricity Regulatory Commission needs to strengthen its capabilities to analyse and forecast the ground realities with the multi-stakeholder perspective, i.e. the government, companies and consumers.
The role of government in distribution companies, however minimal it may be, has a significant impact on the functioning of private companies whether closely held or public-listed. The very presence of government on the board of directors generate public faith in the sector as they perceive that for all lacunae in the governance system, ultimately it is the government that will come to their rescue if private distribution companies resort to profiteering.
The author is the dean of Management Development Institute, Gurgaon