Is it a myth that privatisation of discoms will result in higher tariffs? Praveer Sinha, CEO and ED, Tata Power Delhi Distribution Ltd, would argue so. He also explains to Shashidhar Nanjundaiah why private players like his company are at an advantage on many fronts, whether it is managing AT&C losses or rationalising tariffs.
State utilities are booking huge losses right now for various reasons. But private players on the other hand have been able to check the aggregate technical and commercial (AT&C) losses and performed well. What are the major factors that are helping you outperform the state distribution companies (discoms)? Private players bring in required focus to parameters, whether operational or commercial or technological, where there is accountability in the system, whereas in the government system, that accountability is less. So private players bring in a sense of focus.
There is also a study by the World Bank, which finds that consistency and tenure of CEOs or heads of organisations [among private companies] are much longer, and to an extent, this lends consistency and sustainability. In the 11 years, I am only the third CEO in TPDDL. It is important that leadership stands committed to delivery and that leaders bring in a culture of tangibility, monitoring, clear timelines and performance level. Employees who earlier worked with Delhi Vidyut Board (DVB) continue to work with us: nearly 70 per cent of our employees are DVB employees such is our retention level. Employees who could not speak basic English 10 years ago converse in English and even make technology presentations.
Delhi has been experiencing protests some say politically motivated ones against power pricing. Pricing is one of the major elements that will change upon privatisation, so while the government acknowledges the need for rational pricing, there is only so much you can do as far as public protests are concerned. How do you then deal with recovery issues? This is a false perception. The people are not on the streets it is just a few who are politically motivated to take to the streets for their own interest. There are a total of 43 lakh consumers in Delhi, and not even a percent of them are making noise. I think this is more a hype than reality. I say this because I meet consumers frequently. We have a number of mechanisms: One of these is a meeting with the Industrial Welfare Associations every first Friday of each month in each of our 12 districts, where we share new improvements and discuss problems.
We have 100 per cent recovery. We have brought down T&D losses there is no other case in the world that has documented a reduction of losses in 10 years from 53 per cent to 11 per cent. That means only 47 per cent of power that was being supplied was being billed earlier. Today, 89 per cent of that is getting billed.
We need to look at tariffs in a relative sense. The tariff in Delhi is much lower than in all of north India, be it Haryana, UP, MP, Rajasthan or Punjab. Our tariffs are lower than Kolkata and Mumbai, and only slightly higher than Chennai. Secondly, we also must consider availability of power. People in [neighbouring] Gurgaon, Noida and Ghaziabad pay at a rate of Rs 15.50 towards diesel generator (DG) power and consume 12 hours of power from DG on average.
Cost of power depends on cost of fuel and its transportation. About 10 per cent is financing (interest) cost and 10 per cent takes care of repair and maintenance, human resources and administration cost. But the remaining cost of 80 per cent fuel and transportation is not in our control.
What are your new procurement strategies to fight shortfall? What are your ongoing plans to acquire more power, and how much is Tata Power pitching in? All our procurement is long-term. We do business at an arm's length with Tata Power. We have power in excess of the required 300 MW in Delhi, and availability is up at 99.9 per cent for industrial and commercial consumers and 99.5 per cent for residential ones. We tie up extra power to do contingency planning which is spinning reserves to take care of contingencies because all of a sudden a plant trips or goes out of order.
What new technologies have you adopted to manage contingencies such as the notorious grid collapse last year? Have interoperability, smart grid and smart metering made any progress? Now that you have achieved a certain amount of stability, can Delhi be a model in technology adoption? Two things have happened after the blackout last year. One is the islanding operations, for which we have three generating plants within the Delhi region. We also own a 100 MW generating plant, so in case of a grid collapse and outside power stops coming in, we can still run certain emergency services like metro rail, [telecom or other] towers, hospitals, airports and government buildings.
Secondly, as the first step towards smart grid adoption, we are adopting smart meters: we will start installing smart meters from next year onwards, especially to large loads of 300 KW and above. In case of these units we can work with them on demand response, incentivising off-peak load so as to reduce peak load use.
Would that be a tiered pricing mechanism? Yes, that is the incentive. We are also considering effective use of rooftop solar integrated with grid. For that we need net metering. Our meters are unidirectional we would need need bidirectional ones to accomplish this. We are executing a pilot project and hopefully in the next one year, based on results, we should be able to take it forward and increase number of people and consumers.
Are you conducting any campaign to promote rooftop installations [with bidirectional metering] capability? We have still not started [the execution] as we need to do some backend work on the technology. Bidirectional meters are not produced in India. We need to manufacture them and obtain a Bureau of Indian Standards (BIS) certification before implementing it.
How has the franchise model worked for you? It needs to evolve, and our experience has not been good. Everything depends on the kind of support the government provides.
Our Jamshedpur and Ranchi [projects] have not started even though the order was issued last December. There are many audits that need to be accomplished and in a fair and transparent manner equipment, system, network or financial, customer audit, and so on. Similarly, we need to ensure availability of power at reasonable cost and financial support to revamp the system. The government needs to support at each level, and this is a huge challenge. We have issues from employees and local leaders and, like in any other sector and especially in public utility, the public immediately gets impacted, and people look for the popular vote.
Rumours are you're going international Yes. We have looked at opportunities outside, but to start with, we are looking at consultancy related and operational technology related opportunities, whereby we go in as a consultant and help discoms in improving operational technology and improving the efficiency.
We have obtained consultancy assignments in UP, Haryana and Nigeria. We are looking at opportunities in Turkey. There would be no financial transaction or financial commitment, nor will we be taking over the operations.
The TATA WAY Tata Power Delhi Distribution Ltd is a joint venture between Tata Power and Delhi government, and completed 11 years of operation in the NCR in July. With a peak load of 1,350 MW, the company's major achievement has been to reduce AT&C losses from a whopping 53 per cent in 2002 to 13 per cent now. TPDDL is a pioneer of various technology applications in India, including SCADA and GSM-based street lighting..
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