Friday, July 22, 2011
Wednesday, July 20, 2011
One bigger question that all prospective bidders are now evaluating is 'Which areas to go for bidding?'.
|MP 9 districts benchmarking on 'Distribution Franchisee Attractiveness' |
(Source - pManifold Analysis from secondary research and RFP data)
Sunday, July 17, 2011
Yesterday, I attended a Science and Technology Awareness Raising and Information Campaign in India organized at Nagpur. They are visiting almost 22 cities in India including tier 2/3 cities for promoting European Union's (EU) research focus and support system.
Lot of interesting things were shared including a memory stick containing detailed information on the research funding and opportunities provided by member states especially for Indians.
Two important things that stood out:
- There are funding opportunities available for individual researchers and SMEs under the European Union's 7th Research Framework Program. Especially in Information and Communication Technologies (ICT), the research investment that has been made has been the maximum amounting to over 9 billion euros. The special support for funding research projects for SMEs is also an interesting endeavor to encourage application oriented research.
- There is a proper support system in the form of European Business and Technology Center (EBTC), which promotes innovative technologies and converts research into commercial ventures. Although their focus is on cleantech, however a lot of ICT get's involved here too. EBTC can help connect innovative, local businesses with European counterparts for collaborative programs.
The EU delegation campaign was an informative one, at Hotel Pride, Wardha road, Nagpur, with a delicious lunch that followed. However, only 20 odd people comprising of entrepreneurs, academicians and researchers attended the conference. The EU is opening up to India, but are we from emerging cities listening to the call?
Sunday, July 10, 2011
What real gains both the utility and end-consumers could expect coming out of the Distribution Franchisee model?While Bhiwandi implementation of Distribution Franchisee has shown increased consumer satisfaction for improved service levels, but it is yet to be proved conclusively that the model has brought any significant monetary gains to the utility. The slow emergence of a potential impactful model (distribution franchisee) amidst opposition - from utility employees and end-consumers, could be attributed to missing INFORMATION and transparency. Opposition from utility employees is obvious as DF with its flavor of privatization is based upon driving cost efficiency by increasing productivity and hence reducing on numbers of utility employees. But opposition and fear from end-consumers is little less understood, when it doesn't matter that same power at same tariff (decided by State regulators & common to the state) comes from utility or DF. May be this fear from end-consumers has some roots in weaken regulation/enforcement or mis-information or perceived apprehensions.
In any case, going forward there are many questions, that needs clarification to smoothen resistance, but more importantly to engage all stakeholders well to co-create sustainable solutions. A few of importance are:
- With reduced AT&C losses from 50+% to order of 15% and reduced administrative & operations costs, could it be expected to see decreasing power tariffs (or atleast no changes for 5-10 years inspite of rise in power procurement costs) as realised by end-consumers? If and how does DF monetary gains could be shared with its end-consumers?
- Since there is only one state level tariff plan prepared, consolidating audit reports from each circles/zones, the good and bad performances of different circles (including that of Franchisee's) get mixed to create one tariff plan. So in such case unless more decentralization penetrates in distribution, that DF circle end-consumers cannot expect their tariff plan alone to be improved. If however DF model scales all through out the state, then combined benefits could still bring common savings to all state end-consumers.
- Above would also mean that even if one circle's management did a poor job of cutting its AT&C losses, there is no way of penalizing them independently. The entire state end-consumers get penalized equally. This is one serious missing incentive structure that has plagued utility's performance.
- What are financial calculations that local utility has to consider to make a strong case for bringing in Distribution Franchisee over business-as-usual case? What profits (if any) can utility expect by leasing out its assets for 15 years to Distribution Franchisee?
- How does the effective cost of distribution to local utility is accounted in setting benchmark input rates and its locking for next 15 years? We only hear the price realization terms like ABR (Average Billing Rate) and tariff setting term ARR (Aggregate Revenue Requirements) in RFP, but no comparison of these with actual cost of distribution.
- Has post DF termination and appropriate depreciation of assets already being accounted in investment decision making?
- Is utility prepared to take charge again post DF tenure or will it re-lease another DF term or there will be full privatization?
Wednesday, July 6, 2011
The table below provides the brief summary of Power Distribution Franchisee projects of 9 districts in MP.
Distribution Franchisees RFP References: