STRATEGY PAPER ON POWER SECTOR IN DELHI

Introduction

Demand-Supply Imbalance

Transmission and Distribution Losses

Financial Position

The Need

The Reforms Package

Protecting Employee Interests

Short-Term Action Plan

Conclusion

Introduction

1. The power situation in the nation's capital has assumed crisis proportions. Power cuts have become a regular feature. Demand continues to rise sharply but new investments to meet this demand are not on the horizon. Thefts of power are alarmingly high and are at levels unmatched in any other part of the country or even the world. The financial position of the Delhi Vidyut Board (DVB) is extremely precarious and this is coming in the way of modernising the power system. The haphazard pattern of urbanisation is putting enormous pressure on the ability of the DVB to supply power on a reliable basis. The peculiar load curve of the capital is adding to frequency dips and irregular supplies. When DVB was formed in 1997, no efforts were made to change the work culture of the organisation and structure it to run on commercial and professional lines. The work culture and management practices of the DVB have also been responsible for the present dismal state of affairs.

    1.2.  The performance of power sector in Delhi has deteriorated sharply in recent years. This is evident from the  following facts:

          *     There has been no new capacity addition either by the DVB or by the private sector.

*    T&D losses have increased from 22.6% to 42.7%.

*    Maintenance has been neglected as reflected in the lack of overhaul of the four gas turbines.

*    Operating losses of the DVB have risen from Rs. 250 to Rs. 713 crores.

*    Money due to the DVB has increased to Rs. 1000 crore.

 

      1.3    This section gives a brief analysis of the current power situation in Delhi and spells out a strategy for the Government  on the reforms and restructuring of the power sector. It is meant to generate wide debate and provoke discussion.  The reforms programme will create new corporate entities that will operate in a commercial and consumer-friendly   manner. It will promote competition and create an economic environment that will be conducive to new investments in the power industry. It will also depoliticise the process of power tariff adjustments.

2. Demand-Supply Imbalance

 

1. The overall power demand-supply position in Delhi in the last five years is shown below :

 

Year	1993-94	1994-95	1995-96	1996-97	1997-98
Peak Demand  (MW)	1631	1898	1984	2051	2355
Own Capacity (MW)	397	330	183	247	333
Purchased Capacity (MW)	1234	1568	1801	1801	2022

Energy (Million units)

Available for sale	12082	11773	12996	13528	14530
Own Net generation	2108	2080	2018	1850	2000
Purchase	8974	9693	10987	11676	12530

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2. The growth rate in peak demand is almost 10% a year. Per capita consumption in

Delhi is around 1000 KWH, which is almost three times the all India averages. By 2002 that is in just three years times it is estimated that peak demand of power in Delhi will increase to about 3500 MW and the energy requirement to over 20 billion units.

3. While demand is galloping, capacity additions have remained relatively stagnant. DVB's own generation installed capacity is 694 MW but availability is no more than 300-350 MW. The Indraprastha Power Station that provides 125 MW is 30 years old. The Rajghat and Gas Turbine Stations that provide about 250 MW are over a decade old. There has been a delay of over two years in the overhauling of these gas turbines.

 

4. Over 80% of Delhi's power needs are met by purchases and sharing of power from outside. The net cost of power generation from owned power plants is high due to the relatively low level of capacity utilisation and high specific consumption of fuel brought about by the age of the plants.

 

5. New capacity dedicated to the growing need of Delhi is essential. In the last five years, three new generation projects with private sector participation have been identified. But for various reasons, little progress has been made in implementing these projects. These are Bawana Phase-I (421 MW), Bawana Phase-II (650 MW) and  Apollo Power Project (300 MW). The bulk of these capacity additions will deliver benefits only after five years. The DVB's Pragati Power Project with capacity 360 MW is expected to be commissioned in three years time. Another project of the DVB to replace the I. P. Station is under planning but this will take another decade for full completion.

 

6. It is necessary to initiate discussions with the NTPC and the NHPC, as well as with States having surplus  hydel power like Himachal Pradesh either to put up plants exclusively for Delhi or to enter into agreements for getting peaking power. Efforts must also be made to get additional power on a sustained basis from the Eastern Region, which is surplus in power.

 

7. The power crisis in Delhi is compounded by the manner in which the Northern Region Grid is managed. Other States not only overdraw power beyond their allocation but they have also not installed under-frequency relays for load-shedding and capacitors for maintaining the desired voltage profile. This forces Delhi to resort to load-shedding automatically, resulting in unscheduled power cuts.

 

8. All sources of supply have been assessed. The conclusion is that as against a maximum demand of 3500 MW by the year 2002 in Delhi, the total availability under the most optimistic of circumstances will not exceed 2600 MW. We are headed for a major catastrophe, unless remedial measures are taken straightaway. This is what makes new investment in the power sector absolutely imperative. But new investments will just not be forthcoming of Delhi's power system is restructured and operated in a commercial manner.

 

3. Transmission and Distribution Losses

 

1. A second unique feature of Delhi's power system is the extraordinarily high levels of transmission and distribution (T&D) losses as shown below:

• First, there are consumers who are on metered supply but indulge in fraudulent abstraction of energy. This includes all categories of consumers including industries and commercial establishments.

• Second, there are consumers who live in electrified colonies but do not come forward to take legal connections.

• Third, there are consumers who live in jhuggie-jhoprie clusters, unauthorised colonies who cannot be given legal connections under the present legal framework,  resorts to direct tapping of power from the mains

• Fourth, there are industries and commercial establishments in non-conforming areas and urbanised villages who resort to misuse or theft due to prevalent conditions of supply.

1. Power supply must be metered and billed accurately. Direct theft must be cracked down. But this can happen only if there is a commercial work environment with accountability of the power utility to the consumers.

 

2. Massive investments in revamping the T&D system and augmenting its capacity is needed to cater to the growing needs and aspirations. This will not be possible under the present dispensation.

 

3. Today accountability is missing because of the very structure of the power supply industry. An example of non-commercial functioning is that the annual accounts of the DVB for 1992/93 have just been audited.

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4. Financial Position

 

1. The financial position of the DVB is precarious and the gap between Revenue Income and Revenue Expenditure has been increasing (See Table-2)

 

Table-2 : Revenues and Expenditures

	Year	1992-93	1993-94	1994-95	1995-96	1996-97	1997-98
A	Revenue income (RS.Crores)	1071.79	1339.87	1527.5	1560.1	1781.9	2300.04
B	Revenue Expenditure (Rs. Crores)	1322.49	1576.56	1921.9	2205.8	2495	3059.95
C	Operating Deficit (Rs. Crores )	250.7	236.69	394.49	645.73	713.1	760




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2. Further, the commercial losses have also been showing an increase (See Table 3)

Table-3: Commercial Losses (Rs. Crores)
1994-95	342.22
1995-96	573.01
1996-97	665.31
1997-98	694.67



These operating losses exclude depreciation and interest charges. If depreciation and interest are taken into account, as they must be, the total annual loss of the DVB in 1998/99 could be higher.

 

3. The billing system in the DVB is in an atrocious condition. In 1997/98, just 57.3% of the energy released was billed. In some months, like in August 1998, the proportion fell to as low as 48.7%. Only about 88% of the billed amount is received as revenue.

 

4. Continuous losses over the years has led to very high payment liabilities in spite of periodic interventions. The arrears  outstanding to the BTPS and NTPC is almost Rs. 6500 crore.

 

5. On the other hand, the DVB itself is owned over a Rs. 1000 crore from various organisations like the Delhi Jal Board and NDMC as well as Haryana and UP SEBs. All this points to a non-commercial environment in which an essentially commercial operation like power supply is functioning in Delhi. An opportunity to become commercial was available in February 1997 when the DVB was formed out of the erstwhile DESU. Unfortunately only the designations at the Board level got changed without changing the work culture, and system of working.

 

6. The Delhi Electric Supply Undertaking (DESU) was a part of the Municipal Corporation of Delhi. In February 1997, the DESU was converted into DVB and its functioning was placed under the Government of Delhi. Delhi Vidyut Board has inherited the losses of DESU.

 

7. Heavy financial investments to modernise the generation, transmission and distribution facilities are required. Already approximately 17% of the Delhi's Plan is allocated to the Power Sector. This amounts to about Rs. 400 crores per year. The annual investments required are at least four to five times this level. The Delhi Government's Budget is already completely stretched and further expansion of the Budgetary support to the Power Sector is difficult.

 

8. DVB has approximately 25,000 employees. These employees require considerable skill upgradation and training. This can happen only if the organisation is structured to run on professional lines with commercial orientation.

 

9. In 1993, the Government of India initiated the process of power sector reforms. Since then it has been highlighting the need to restructure the power sector in Delhi.

 

5. The Need :

 

1. A vertically integrated organisation catering to the diverse needs of a consumer population of 23 lakh and growing significantly every year has inherent limitation. While Management and Technical deficiencies have come in the way of DVB's effective functioning, it is the very structure of DVB that has prevented it from emerging as a dynamic, consumer friendly organisation able to generate funds and to sustain and expand its operations.

 

2. The Reform Agenda has been drawn  to remove the identified deficiencies of the power system and also to make DVB a healthy organisation and to  run on sound business principles.

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6. The Reforms Package

 

1. It is clear that huge financial inputs are required to expand Delhi's generating capacity and modernise its T&D system. Under the present organisation, financial, legal and regulatory environment under which the DVB functions, such inputs will just not be forthcoming. A fundamental reorganisation is long overdue.

 

2. The following plan for restructuring of the existing DVB is being proposed alongwith an immediate short-term Action Plan.

• First, a Delhi Power Generation and Transmission Company should be registered under the Companies Act to manage the existing and planned generating stations as well the EHV transmission network upto 220 KV including sub-station. This company should follow the rules, regulations and the work culture of the NTPC and PGCIL.

• Second, new generation should be encouraged to come up both in the private sector, as also through joint ventures. The BOT/BOOT route could also be followed.

• Third, new power distribution companies should be set up to look after the transmission and distribution network from 66 KV to 400 volts, consumer power supply, metering and revenue collection in the existing six circles of the DVB. These companies should have the flexibility to be organised as joint ventures.

• Fourth, an independent, statutory Delhi Electric Regulatory Commission should be established. This Commission should undertake licensing of new capacity, prescribe performance standards and Fix tariffs after appropriate consultations.

3. The distribution of assets and liabilities among DVB's successor entities should be based on a detailed technical and financial analysis by professional experts.

 

4. To adopt a modern and professional work culture, NTPC (for generation), PGCIL ( for transmission), progressive distribution companies should be appointed as consultants.

 

5. What is being proposed in the strategy paper is already being implemented in Orissa, Haryana and Andhra Pradesh, Rajasthan and Uttar Pradesh are also planning a similar restructuring programme.

7. Protecting Employee Interests

 

1. All legitimate interests of the employees of the DVB must be protected as part of the restructuring. All staff matters must be resolved in full consultation with the unions and employees. There must be no retrenchment or change in service conditions to the detriment of the staff. Pension and all terminal benefits must be safeguarded by the Delhi Government.

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8. Short-Term Action Plan

 

1. A Task Force under the Chairmanship of Chief Secretary has been set up to work out an action plan and monitor its implementation. The reform package will take five years at the very minimum for the benefits to start flowing. But the problems of Delhi are immediate and we expect a shortfall of 300-350 MW of power for the summer 1999. To meet the situation the following steps should be taken:

1. Optimal utilisation of DVB's existing generation capacity.
   
2. Additional purchase of power from other sources including Eastern and Northern Grids to make up the anticipated deficiency of 300-350 MWs.
   
3. To the extent that there should be a gap between demand and supply, the situation should be met by effective demand management. This should be done both by curbing theft of electricity and also by staggering of peak hour load.
   
4. DVB's transformation capacity should be substantially augmented.
   
5. Efforts should be made to persuade the Central Government to maintain Grid Discipline in Neighboring States.
   
6. The growing incidence of theft of power, which cuts across all socio-economic strata in the capital must be combated through the following means :

1. A period of four weeks should be given to the consumers who are entitled to take legal electrical connection. DVB should give electric connections to these entitled persons within four weeks. After the due date, strict penal action should be taken including the disconnection of electricity.
   
2. Process of giving connections should be simplified limited to filling up of one or two forms. Metered supply should provided.
   
3. Connection should be sanctioned on demand except in areas where the network is not existing. Such areas should be notified by DVB.
   
4. Tapping of electricity by hook is already banned. Strict action should be taken against the defaulters.
   
5. DVB should have a dedicated police force.
   
6. A list of theft-prone areas should be publicised by DVB.
   

2. DVB has also submitted an action plan to the Government for the summer of 1999. The Task Force should also strictly monitor the implementation of this plan. The main features of the plan are :-

1. Commissioning of Bamnauli 220 KV switchyard that will benefit West Delhi areas.
   
2. Transformer capacity at 220 KV level to be added at Naraina, Okhla, Park Street and South of Wazirabad.
   
3. 66 KV sub-stations to be augmented/ commissioned at Vivek Vihar, Budhela, Shastri Park, Hari Nagar, Dwarka, and Mohan Co-operative Ind. Area.
   
4. 33 KV sub-stations to be augmented/ commissioned at Ashok Vihar, Masjid Moth, Nizamuddin, Vishal , Geeta Colony, Sarai Juliana, AIR Khampur, Kailash Nagar, Sanjay Gandhi TR Nagar and VSNL Complex, Shivalik and Choukhandi.
   
5. All new consumers having load more than 11 KW to be provided with electronic meter;
   
6. Addition of 835 MVAR of shunt capacitors during 1998/99.
   
7. Audit of all existing 1200 MVAR  capacitor bank to ensure its functioning and to replace the defective capacitors;
   
8. To install 250 MVA of transformer capacity at 11 KV in areas where there is a deficiency.
   
9. Sanction of one point connection in group housing societies, industrial estates, etc within four weeks of completion of all commercial documentation;
   
10. Induction of new technology like vacuum circuit breakers, dry type transformers and LT ACBs;
    
11. Increase in the number of breakdown crews from one to two in each of the thirty districts to reduce the breakdown response time;
    
12. Increase in the number of mobile transformer vans in each of the thirty districts from two to three or more, and to be more responsive to consumer complaints;
    
13. Provide one fully equipped, mobile breakdown van in each of the six circles to meet emergencies;
    
14. Formation of 29 Local Area committees contiguous to a charge of every district to
    increase public participation n managing power supply quality and make the power
    utility more responsive to consumer needs;
    
15. Energy Audits covering inputs and billing of all 29 districts to be initiated and made
      public;
    
16. Stabilisation of three waste heat recovery units at Gas Turbine Stations by BHEL to
      yield additional power;
    
17. . Decentralisation of preparation and printing of bills at district level in ten districts to
    begin with;
    
18. . Adequate availability of meters and service line material;
    
19. Installation of service line and meters through annual rate contracts;
    
20. Maintenance of sub-stations including distribution sub-stations shall be carried out and proper records maintained.

9. Conclusion