CM avare, Let’s change the game of power distribution in Bangalore!

Respected Sir,

Sub: Imperatives for Smart Power for Smart Bengaluru

BESCOM, as also all the other ESCOMs, have been claiming improved performances over the past few years. Even as that may be true, Sir, you’ll appreciate that if Bengaluru, and the other Karnataka cities, have to be identified as “smart cities” of the future, the performances of these service providers have a very long way to go. And, it is totally doubtful if they can measure up to the task, given the constraints they are operating under, largely because of government ownership.

The biggest problem they are facing today is shortage of funds, with the government owing them close to Rs 6,200 crore against farmer subsidy alone any given day, apart from other government agencies, municipalities, etc paying them when able, if paying at all.

Resulting out of it all, the ESCOMs are hardly able to carry on even their day-to-day maintenance work, leave aside matters like taking up expansion (to meet the exponentially growing demand), technology upgradation, etc. The lack of proper maintenance is in turn leading to many accidents, some fatal, causing courts to order huge compensation payments, apart from suggesting removal of transformers and allied equipment from footpaths, all of which is going to be burdening the ESCOMS even more.

The delayed payment receipts by the ESCOMS are, in addition, leading to their delaying payments to KPCL (Karnataka Power Corporation Ltd), the state’s mainstay as far as generation is concerned, the dues to it mounting to a colossal Rs 12,000 crore as of now, for an annual turnover of around Rs 10,000 crore. It’s a miracle it is even surviving, whereas, had it not been for the extremely harsh deprival of its dues, the company could very easily have geared itself up to meet a major part of the state’s overall needs, obviating the need for much of the costly capacity addition that is being talked of now.

Lessons learnt in Delhi

Just a few months back, when the “privatised” Delhi ESCOMs (Delhi has a PPP model) approached the Delhi High Court for help to prevent the NTPC from cutting off supplies to them, for non-payment of bills on time (because of the Delhi government not clearing its dues to them), the Court refused to intervene. Sensing public anger if the situation got precipitated and black-outs became the order of the day, the government quickly made arrangements to release the dues to the ESCOMs, and saved the day for itself.

In the process, all the stakeholders learned their lessons on financial discipline, and the going has been generally smooth thereafter. As compared to that, KPCL is unable to take such measures, since the monies owed to them are from government-owned ESCOMs, all of which is leading to a situation of near total financial anarchy across the sector in the state, crippling almost the entire economy in the process, power being a crucial infrastructural area.

It is perhaps in full appreciation of all of this, Sir, that your predecessors had, as far back as in 1997, committed to ‘privatisation of distribution’, evidenced by a reading of the sub-para titled ‘preamble,’ under ‘reform efforts’ on the KERC website. The emphasis on ‘distribution’ was plainly an outcome of the government’s perception that it was not in a position to carry out the key revenue collection function, coming under it, diligently, because of political interference. What has transpired since has only reconfirmed the cogency in that stance all the more emphatically. As such, various governments thereafter too continued reiterating the intent, though they did very little towards making it happen, on the ground.

Why not follow the Delhi model?

Sir, even as Bengaluru, and other Karnataka cities, have remained stuck in the rut all these years, many cities such as Mumbai, Kolkata, Ahmedabad, Surat etc took the leap long ago, and have been enjoying the benefits of quality power since then. And, over the past nine years, Delhi too has joined them, through a PPP model involving professional private players, the 49% government stake in the licensee companies giving it the necessary say in the management too. The structural details can be seen here.

Most parts of Delhi today enjoy system reliability of the order of 99.9%, meaning they are beginning to junk their gen-sets, inverters, converters, UPS’s, etc, even as, with reliability levels far lower, we in Bengaluru (as also most cities served by government-owned service providers) are becoming more and more dependent on them.

The additional costs in terms of the investment on these equipment, fuel consumed, maintenance, prime urban space occupied, air and noise pollution caused, larger carbon footprint caused, are all making us less and less competitive and livable, even as, prodded on by the Centre’s new initiatives, many other cities across the country too are now poised to become ‘smart’ very soon, an essential component of the scheme being reliable grid power supply.

The phenomenal turnaround achieved by Delhi, in very many aspects, as a result of going in for the PPP model, can be best appreciated from a perusal of the data. (This is as per data shared by Tata Power on their website, and has not been verified independently.)

And, Sir, reliability doesn’t necessarily mean higher cost, a fact brought out clearly by a comparison of the tariff levels in Delhi (for 99.9% reliability) and in Bengaluru (for much lower level of reliability). Check the comparison below.

* Out of these, Kolkata, Mumbai and Ahmedabad have roped in private players for power supply. (The table is shared by Tata Power, and the data has not been verified independently.)

The Delhi model can be readily replicated in Bengaluru, after making the necessary tweaking required to take care of local peculiarities. In that respect, firstly, like with Delhi, the city utilities have to cater to the city loads, and not those of Kolar, Chitradurga, etc. All those rural loads have to be tackled in different ways. There are other good examples, like those in Gujarat, and even our own Hukkeri Co-op Society model. Hukkeri is a town in North Karnataka, near Belgaum.

Under the Hukkeri model, the Co-op Society involved, acting as a licensee, was buying bulk power from Karnataka Power Transmission Co Ltd (KPTCL), distributing amongst the farmers and other consumers, against monthly billing and payments. Apparently, things went wrong when a populist government went back on the idea of metering supplies to farmers. The enlightened farmers and rural folk have by now realised the non-workability of unmetered supplies, and one may be sure, are prepared for metered supplies, with eligible subsidies whatever being routed into their bank accounts, through Aadhaar.

All of the above has evolved over considerable debate over a number of years on PRAJA. These may be accessed using following URLs on Praja.

1) http://praja.in/en/blog/murali772/2008/05/28/imperatives-privatisation-power-distribution

2) http://praja.in/en/blog/murali772/2011/12/24/delhi-power-distribution-privatisation-model-all-cities-follow

Further, Sir, even if the government were to make arrangements to release subsidy and other payments on time, it is not as if everything can fall in place. It is a well-recognised fact that there are serious limitations to government’s handling these functions directly, with the rapid advancements in technology in today’s world, even with most proactive of officers at the helm, and as such it is best made over to professional companies, perhaps with a bit more strengthening of the regulatory mechanism.

I will be more than happy to meet you in person and explain further, if given the opportunity. I look forward to hearing from you.

Thanking you,

Yours truly,

Muralidhar Rao

About Muralidhar Rao 0 Articles
Muralidhar Rao is the President of Praja-RAAG, a registered Society formed of active bloggers on praja.in.

4 Comments

  1. Dear Mr. Rao, kudos on a well thought out and researched submission to the Hon. CM. I am curious to know if he or his office has responded yet, especially as this CM is known for his fiscal prudence and is a non-believer in financial profligacy. Of course as you have also pointed out in your article that privatization is not a new idea but was already enshrined in the preamble of the reforms efforts by earlier governments the fact that nothing much has happened since then clearly indicates that it’s more about politics and less about financial logic. I wish the Congress party wakes up now and develops enough courage and the vision to make Karnataka the Gujarat of Congress ruled states. By 2018 the Congress should be able to fight Modi’s development plank with its own development successes in Karnataka where they have been elected with a thumping majority but are generally blundering along looking to the clueless High Command to provide direction! But alas expecting this from a party built on the bedrock of sycophancy and dynastic politics is foolish. So Mr. Rao to put it bluntly nothing will come about unless someone in the High Command finds it fit to order the Hon. CM to get this done. At the same time I am hopeful it can still happen – after all it was a Congress CM who executed this in Delhi. So good luck to us with the hope that Bangalore’s electricity distribution becomes as efficient and ‘non load shedding’ as Mumbai and the polluting gensets in factories, SEZs, malls, apartment complexes, cellphone towers et al disappear and generally contribute to restore some of Bangalore’s famed ‘salaborious’ climate!

  2. Besides, Sheela Dikshit government was voted out of power on account of its perceived role in the CWG. Before that, power distribution reforms (and Metro Rail) were largely contributory to its being voted to power for three consecutive terms.

  3. Instead of pseudo-socialistic rhetoric, if arguments are put forth based on facts, one can perhaps further the debate. Whatever, enough of debate has already happened on the PRAJA sites, links to which have been provided in the body of the article.

    Muralidhar Rao

  4. Not surewhy the autho has masked the facts that, the privatization in Delhi of powet distribution is a huge scam that fell the Delhi govt itself. The private power distribution companies havr charged people upto 16 rs an unit and govt paid them them the subsidy of upto 12rs per unit to reduce burden on people. Ultimately from people’s tax money these amounts were paid. Apparently there was tie up between govt babus and these private distribution companies.where as govt run distribution companies are charging people ar 3 to 7rs. There is a huge conspiracy to make distribution companies private to yield huge money for private companies and govt babus. Privatization of electricity companies will yield similar results that happened to sugar factories. They conspiringly closed all govt run sugar factories to make profits to private factories run by govt babus. These electricity distribution are also being tried make private, so private companies by babus will make huge profits.

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