WITH reference to the article Power of profit (July 31), we would like to state the following:
The articles reference to 12 to 15 hours of power-cuts does not reflect the ground realities. One or two isolated incidents in an area spread over 1,000 sq km covering a base of 2.5 million consumers have been generalised by the media.
It is a matter of record that in June 2009, BSES discoms actually supplied 14 per cent more power then they did in June 2008 representing higher growth compared with other discoms of Delhi. This is not possible with 12- to 15-hour power-cuts.
It is true that our consumers had to face some hardships mainly because Uttaranchal could not return the power that BSES discoms had given to it in the winter of last year. This was due to the States own generation falling low owing to a drought-like situation and a few other plants of the NTPC witnessing forced outages.
Further, BSES discoms service area also experienced outages on account of the underperformance of Power Grid Corporation of India Limiteds Mandola Grid, because of which shedding was forced on the discoms by the State Load Dispatch Centre (SLDC) to give relief to the equipment so as to avoid a bigger catastrophe. Cancellation of open access by the Government of Rajasthan for the bilateral sale of power by their captive unit to BSES also added to its woes.
As regards human resources, BSES inherited the finest human resources in the sector from the erstwhile Delhi Vidyut Board and has augmented them sufficiently in the last seven years.
It may be understood that electricity distribution is a regulated business where discoms are entitled to a certain percentage of return on their equity on meeting the rigorous performance standards set by the Regulatory Commission. Therefore, the allegations of profit motives are totally baseless.
The power purchase is a 100 per cent pass-through element to the consumers. Discoms have a fiduciary responsibility to their consumers and therefore use prudence in the matter of sale/purchase of power. In fact, sale of power in the time slots after meeting own requirement is to the benefit of consumers as it helps in containing the average power purchase cost to the consumers.
The quantity of power (reported 5.4 million units) sold by all discoms against a supply of over 2,300 MUs in June represents less than 0.25 per cent and should not be considered a parameter of efficient and vigilant discoms. It is to be understood that power cannot be stored and has to be consumed at the very moment it is produced. Even during the days of shortages, there are time slots of the day when the power is surplus as determined by the SLDC, and it is sold outside to optimise the power purchase cost for the benefit of consumers. Here again, BSES has sold much less power compared with other Delhi discoms.
The BSES discoms investments towards augmenting the infrastructure in Delhi belie the claim made in the report. However, it is to be understood that the money spent by discoms is ultimately borne by the consumers. We still do not see any reason why Delhi consumers should be denied access to any fund including the APDRP funds just because distribution companies have been privatised and which will reduce the cost of capital.
Information regarding all-round improvements including reliability and availability indices, reduction in breakdowns, no current complaints, transformer failure and other customer service parameters are in the public domain. The significant improvements made in the past six years do make privatisation an astounding success in Delhi.
There are certain observations made regarding Aggregate Revenue Requirement. This being a matter under judicial authorities, it is not proper for us to comment. Suffice it to say that successful appeals against successive tariff orders by all Delhi discoms tell an entirely different story.
Finally, the votaries of the anti-privatisation theory would do well to look into facts and figures. Prior to 2002, the Government of Delhi was giving an annual subsidy of approximately Rs.1,300 crore, besides undertaking Capex [capital expenditure] to augment the network. This subsidy bill was rising year after year, owing to an increase in consumption despite a CAGR [compound annual growth rate] of over 14 per cent rise in the retail consumer tariff in the decade prior to privatisation.
Post-privatisation, the government has saved over Rs.3,000 crore in subsidies and Capex, which is now zero. The retail consumer tariff in the seven years of the post-privatisation period until March 31, 2009, has seen a rise of merely about 3 per cent CAGR despite a steep increase in the bulk power purchase cost, including that being paid to NTPC stations (being paid entirely by discoms) which at times have amounted to over 20 per cent increase in a year. All this with significant improvement in consumer services and standards of performance.
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