Revenues from rural power consumers have risen 72 per cent following a local participation project executed for power distribution companies in rural Orissa by the Xavier Institute of Management, Bhubaneswar (XIMB).
The project was set up for over a year in 4,900 villages in western and northern Orissa, where sale of power was a loss-making proposition. Reduced costs, enhanced revenue and improved customer satisfaction have made selling power there viable, XIMB sources said.
Actual collection against billings increased 72 per cent from 1999-2000 to 2000-2001 in the 4,900 villages. XIMB was appointed by the Centre, with assistance from the World Bank and grants from the government of UK. The distribution companies, both BSES subsidiaries, Wesco and Nesco, commissioned the project.
XIMB sources said the success had attracted the attention of the Karnataka government, which has initiated steps to replicate it to boost returns from rural power sector and demand for power from agriculture.
The plan works through village committees (VC) and a village contact person (VCP). XIMB started off with a pilot project of 100 villages in Attabira area in Bargarh division of Burla circle. In each village, the VC selected the VCP to represent village customers before the companies and communicate to villagers functioning of the company.
The VCP did the meter reading, bill distribution, credit control and collection besides forwarding complaints and tracking them till solution. Regularisation of unauthorised consumers, settling of disputes and making recommendations for connections and disconnections besides education of consumers were his other responsibilities.
When formation of VC was discussed with power company managers, they apprehended erosion of their authority. They felt the plan will make them dependent on customers for revenue realisation. The plan hinges on a specific instruction not to disconnect power supply to consumers without approval from VC.
This made the entire village responsible for curbing power theft, but made it more difficult for defaulters to continue hooking in the midst of peer group pressure. XIMB said this dependence was not unusual in a collaborative venture as alliances result in some loss of authority.
But sharing of authority led to increased cash flow, market share and customer satisfaction. As a result, acceptance from villagers went up owing to transition from an adversarial relationship to a collaborative one as reflected in increased revenues.
The benefits to villagers was voltage improvement through metering and system improvement, upgrading of transformers, greater awareness about energy conservation, transparency in new connections and consumer awareness about their rights.
For the electricity companies, the benefits were streamlined meter readings and bill distribution, a one point complaint centre, better regulation of disconnection, installment agreements and new connections and vastly simplified collections logistics.
Under the earlier system, power cuts continued indefinitely and burnt transformers were rarely replaced owing to losses while voltages was as low as 40 watts. As most consumers did not have working meters, they were billed on a load factor basis. This hit honest consumers as dishonest ones overconsumed and wasted power with impunity.
For the power distribution company, the villages were a problem, with low consumption, rampant theft of electricity and connivance of some employees with power thieves. Cost of collection exceeded revenue earned.
