Power privatisation in Delhi yields good results

It has been about five years since DK Raman, a South Delhi resident, was asked for chai-paani by the chaps who supplied power to him. His power supply has become less erratic, as have his bills.

He is among the many residents of Delhi, who are giving a thumbs up to privatisation in distribution.

It was in 2002, that the government of Delhi privatised power distribution and triggered a reform in a system where aggregate technical and commercial losses exceeded 50 per cent, with the accumulated losses at Delhi Vidyut Board (DVB) totalling over Rs 23,000 crore.

Though tariffs are under regulator's purview, Delhi's tariff is one of the lowest not only among the neighbouring cities but also among all the other metros.

An average consumer in Delhi, using around 300 units a month, will have an average electricity bill of around Rs 820. In contrast, customers living in neighbouring cities of Faridabad and Gurgaon will have an electricity bill of Rs 1,132, while a Noida resident will have to shell out Rs 1,000, according to data supplied by BSES.

Residents of most other metros would also be paying more for their power "" consumers in Mumbai will have an average bill of Rs 930, Kolkata Rs 1,172, Bangalore Rs 1,088, Hyderabad Rs 992. Only in Chennai a customer will pay less "" Rs 555.

The process of privatisation began in July 2002 when Reliance Energy owned BSES and Tata Power owned NDPL started distributing electricity in the Capital. Reliance Energy Ltd - owned BSES manages power distribution in two-thirds of Delhi through its two companies - BSES Rajdhani Power Limited (BRPL) for south and west Delhi and BSES Yamuna Power Limited (BYPL), which looks after central and east areas.

The Tata Power-owned NDPL distributes power to the north and the north-west of the Capital.

"In less than five years, Delhi's power sector privatisation has shown brilliant results and has become a success story of public-private partnership," says Lalit Jalan, chief executive officer, BSES.

According to experts, the biggest problem was that of aggregate technical and commercial (AT&C) losses, which now have come down significantly.

In NDPL areas AT&C losses have come down from 53 per cent to 26.52 per cent whereas in BRPL areas the number has come down from 51 per cent to 35 per cent and in BYPL areas from 63 per cent to 43 per cent.

The discoms have invested over Rs 4,000 crore in the capital state in improving, strengthening and modernising the infrastructure. BSES has invested over Rs 2,900 crore and Rs 1,200 crore has been pumped in by NDPL.

Earlier, Delhi government used to give an annual subsidy of over Rs 1,200 crore to the erstwhile DVB. However, this subsidy is no more being given to the discoms. "These discoms have actually been able to save Rs 3000 crore of the exchequer," says power sector expert at the Indian Institute of Public Administration Shekar Reddy.

And this does not include the efficiency gains that the likes of Raman are enjoying. The distribution transformer failure rate (DTF) has reached the international standards at one per cent compared to 13-15 per cent in the pre-privatisation days.

Says Arup Ghosh, chief operating officer, NDPL, "We have brought in a more reliable electricity supply, better consumer services and stable tariff in the past four years."

The last tariff revision by NDPL was done in April 2004.