Was it worth it?

While it is clear that there were lapses in the manner in which the erstwhile Delhi Vidyut Board (DVB) was privatised, in that the major post-tender sops made available to BSES and NDPL were not offered to other bidders who walked out of the process mid-way, the questions today are whether the power situation is better than what it was in the old DVB days, and whether the government's annual outflows of assistance to DVB have reduced.

The answers are an unequivocal yes. Technical and commercial (including theft) losses, which fell from 54.5 per cent in 1995-96 to 50.2 per cent in 2001-02 after which DVB was privatised, are now down by a further 10 percentage points.

And there can be no doubt that the major quality parameters show improvement (both transfer failures and load shedding are a fraction of what they were in the DVB days, with room for improvement in the area of customer service and complaint redress).

That there are still power failures is because power in the northern grid is in short supply from time to time, and this is outside the control of the private discoms.

As for the government's expenditure on DVB, this has come down from about Rs 1,650 crore in 2001-02 to an estimated Rs 650 crore this year, after adding the additional expenditure the Delhi government will make to absorb half the rolled-back hike in electricity tariffs, the other half being absorbed by the discoms themselves.

The legacy issues of how the discoms were valued at the time of privatisation, the debate about the "asset value" of DVB and the "business value" estimated by the consultants will probably stay with us for some time, but there can be little doubt that privatisation has delivered commercially and technically.

Finally, while it is true that the returns to the discoms are high (16 per cent post-tax, if they meet their targets) and that NDPL (though not either of the BSES companies) earned Rs 37 crore as bonus on an enhanced equity base of Rs 592 crore (the initial equity was Rs 368 crore), the fact is that Rs 37 crore in the context of last year's total electricity sales by both discoms of around Rs 5,000 crore is less than 1 per cent of what consumers paid.

The reason for the high power tariffs, therefore, is not the returns the discoms get under the Delhi government's directive to the regulator (which in any case expires in two years), but the unacceptably high levels of commercial losses in the system.

These cannot be corrected without the Delhi government coming up with stringent anti-theft laws, special police forces and courts to tackle the matter, so that losses can come down to the levels prevailing in, say, Mumbai.

The flip side is that there have to be equally stiff penalties on the company for faulty meters and incorrect billing. The action on power thefts was promised when privatisation happened, but there has been no action in three years.

If there are further delays in reducing the rampant power theft, the next power shock for paying consumers will not be long in coming. If theft levels show dramatic reduction, then Delhi's power tariffs should in fact come down.