Tuesday, April 12, 2011

Performance Analysis of Distribution Franchisee - Bhiwandi Case study by Torrent Power Limited

Bhiwandi, Maharashtra saw the first successful pilot of Power Distribution Franchisee (DF), with Torrent Power Ltd. (TPL) as selected Franchisee and MSEDCL the original licensee. The model adopted was Input based franchisee - with TPL agreeing to purchase power from MSEDCL at the input point to Bhiwandi circle at year-wise fixed input energy rate (Rs./kWh) for a contract period of 10 years and executing distribution responsibilities including metering, billing, revenue collection, repair, maintenance, O&M cost of network, consumer service, capital expenditure, allocating new connections etc. With operations commenced from 26th Jan 2007, TPL has completed a successful milestone of 3 years of its operations with ATC loss reduction from 58% to now 18.5%.

Pre-DF & Post-DF Performance Benchmarking

The table below summarizes the status on Key Performance Indicators (KPI's) in Pre & Post Distribution Franchisee.
Power Distribution Franchisee - Bhiwandi Performance Data (Source: From M.Kele's presentation @ IIES)

Improved management, consumer & repair services, collection efficiency led to increase in revenue from Rs. 272 cr. in FY2007 to Rs. 618 cr. in FY2009. A Customer Satisfaction Survey conducted by Prayas Energy Group revealed that approximately 68% of the representative consumers felt satisfied with the quality of supply due to system improvements under Distribution Franchisee.

Key findings going forward with Distribution Franchisee

Prayas Energy Group, Pune published a research report reviewing performance of Bhiwandi Franchisee operations and brought some considerations going forward to scale the model:
  1. Improved quality of base line data is essential for to provide confidence to prospective bidders & expect rationale bidding. This will also increase accountability of licensee as well as of successful bidder for post franchisee performance.
  2. To support smooth and effective change management from utility to Franchisee and raise confidence in end-consumers on franchisee operations, a strongly enforced regulatory framework of performance monitoring and audits are very essential including the correctness of new meters and billing.
Surely, Bhiwandi model has many things to be improved upon, but it has set an inital right tone in all stakeholders - utility, businesses and end-consumers about Distribution Franchisee. MSEDCL has repeated with improvements similar model in Nagpur, Jalgaon, Shil, Mumbra and Kalwa. Many other states like Uttar Pradesh, Madhya Pradesh, Haryana, Gujarat, etc are considering this option & are at different stages of execution. Our earlier blog has covered these opportunities.

Please share your opinion on performance metrics you perceive important for evaluating Power Distribution Franchisee through comments.

Post by: Kunjan Bagdia @ pManifold

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