What is past, present and future of Power Distribution Franchisee (PDF)
India’s economic crisis in 1991 pushed the way for reforms with three aims i.e. liberalisation, globalisation and privatisation. However, in spite of various reform initiatives, losses in the distribution sector increased by manyfolds. The Electricity Act 2003 brought important changes in policy by provisioning private participation in the power sector. MSEDCL was a pioneer in implementing Input Based Distribution Franchisee (IBDF) in 2007 for 10 years in its Bhiwandi Circle, with AT&C losses reducing from 61% to 18% in 4 years. Accordingly, erstwhile Planning Commission supported a study of the project for considering this as next phase of distribution reforms by state licensees. Subsequently the “Shunglu Committee” also recommended adopting the franchisee model. States like UP, Odisha, Bihar, Rajasthan, MP adopted this model. The Electricity (Amendment) Bill, 2020 will further pave the way for next level of reforms like introduction of “distribution sub-licensee” besides franchisee. Further, upcoming government funding is getting linked with compliance of reforms. Apart from Rajasthan & Maharashtra, IBDF has been appointed in NER states like Tripura and Meghalaya. I am sure that these efforts will improve the overall performance of any utility.
What is your experience in the DF business?
I had the opportunity to work in India’s first successful IBDF Scheme at Bhiwandi both in the pre & post franchisee periods during my tenure in MSEDCL. A guided and monitored rollout plan was implemented as per contract covering EHV capacity enhancement, network upgradation, mass meter replacement, revenue management, customer care service management, human resource management, change management & coordination with different stakeholders, etc. In addition, benchmarking input rates, joint audit of assets, discom to IBDF handing over process was also monitored. Some blackspots were also experienced like rise in accdent cases due to poor network understanding, bad quality of cable work, among other issues. This helped me to do research on ‘PPP Model in Power Sector’ which is recognized as unique work in the power sector. I have authored two books on franchisee namely, “Power distribution franchisee a Success story of first franchisee model in Bhiwandi”and “Distribution Franchisee business: A case study of Nagpur” published by NPTI Faridabad.
What is your perspective on the power distribution in Tripura?
Tripura, being power surplus and natural resources-rich, exports power to adjacent states like Mizoram, Manipur along with doing cross-border trading with Bangladesh. However, last-mile connectivity to 30 per cent of it’s tribal population, more than 90 per cent of domestic consumers, lack of professionalism due to employee-mix, hilly terrain, old and deteriorated infrastructure, lengthy and loaded feeders & high losses due to poor techno-commercial efficiency are the major contributors of its AT&C losses of 35 per cent. These inefficiencies can be overcome by implementing various reforms like R&M, IT initiatives in MBC chain, PPP initiatives etc..
What were the key challanges being faced by the utility in the franchised areas?
One of the challenge is the high level of AT&C losses of 31%-50% during FY 2015-16 to FY 2018-19 due to poor billing and collection efficiency in some areas despite implementation of various development schemes. Correct measurement of input energy, accumulation of huge outstanding, high rate of transformer failure, frequent tripping and breakdowns, poor consumer services, extremely remote tribal area etc. are some of the other challenges being faced by TSECL.
What benefits have been realised by the utility in the franchised areas so far?
It has only been 3 months that IBDF is in operation and it is too early to examine the benefits achieved. Initial data shows promising trends. Some of the benefits have been an increase in input energy by 100%, cashflow improvement by 61%, power supply reliability improvement by reduction of no of feeder tripping and breakdowns, local employment generation, proper accounting of assets, faster redressal of consumer grievances regarding new connection, metering, billing and other services. Also, there has been a reduction in CAPEX and OPEX investments, increase in income of state Govt. through electricity duty, implementation of cutting edge state-of-the-art technologies without any cost, adoption of best practices for customer delight.
What are other reforms being implemented in your organisation?
In Tripura, currently besides Input Based Power Distribution Franchisee multiple other important activities performed are in progress like formation of new IT, HR & Vigilance department, establishment of new smart customer care call center with deployment of FRT, installation of prepaid & smart meters, online health monitoring system for transformers, smart and prepaid meters. ADB funded R&M activities like use of covered conductor, HVDS, autoreclosures & sectionalisers, smart meters, up-gradation of gas-based generation from open cycle to combined cycle technology for efficiency improvement with no additional fuel, World Bank funded system improvement scheme for EHV substations & lines, use of HTLS conductor, setting up of 400kV substation under NESIDS funding, TSECL at your doorstep for resolving consumers complaints etc.). There are projects/initiatives of about Rs 5000 Crores under implementation.