IT firm Spanco Telesystems took over three distribution areas of Nagpur this May, after it won the licence through competitive bidding. The BPO company aims to bring in efficiency in management and curb thefts, and transform these loss making areas into profits.
The company will invest around Rs 350 crore in capital expenditure in achieving this objective. Yet another aim of the company is to improve the service standards of power distribution to their four lakh consumers.
“We aim to reduce transmission and distribution losses from the present 33 per cent to sub-15 per cent level in the next three-four years,” says Kaustubh Dhavse, senior vice-president -strategy, Spanco.
The distribution lines which are amongst the most loss making areas of the city, have many consumers who draw electricity without legal connections. “Our objective is to bring everyone under the revenue net. People would pay neither anything extra nor anything less than the power consumed,” he said.
Along with Nagpur’s franchisee, the Maharashtra State Electricity Distribution Company (MSEDCL) also also brought in yet another private player, GTL, to manage the power distribution of Aurangabad as well.
These projects, the government hopes, will help reduce the transmission and distribution losses, an area which was earlier a bastion of state electricity boards.
There have been quite a few success stories which has bolstered more private participation into the sector. One of them is Delhi.
“T&D losses in Delhi went down from 60 per cent to 18 per cent in five years. This has resulted in saving of Rs 25,000 crore to the government,” said Lalit Jalan, director of Reliance Infrastructure.
When Gujarat-based Torrent Power took over the Bhiwandi line in the Thane district of Maharashtra, the losses were around 60 per cent. That was reined into around 15 per cent, by the company.
Debashish Mishra, senior director of Deloitte Touche Tomatsu said that the success of such privatisation depends on the area as well.
“If it is a fully urban area, then one can demonstrate loss reduction quickly. Urban areas have issues like power thefts which have to be dealt with,” he added. Some others have doubts on the capabilities of newer entrants into the sector as well.
“Companies like Torrent Power and Tata Power have already been working in this sector and have their network plan ready even before making an investment. The newer players may find some initial difficulties in this respect,” said a power sector analyst.
In spite of quite a few success stories, distribution sector has not seen widespread privatisation unlike generation and transmission areas. The reason, according to Anil Kumar Lakhina, a sector expert and the former chairman of Rural Electrification Corporation, is reluctance of state governments to allow private companies.
“Losses have been brought down to 30 per cent from 60 per cent. They can be further brought down to around 10 per cent, taking into account 7-8 per cent system losses. Conversion of overhead lines into underground lines, increasing voltage of the lines can reduce them further,” he said.
(With inputs from Katya B Naidu)
