Pre-Bid conference take-away from Madhya Pradesh Distribution Franchisee bids

Madhya Pradesh (MP) Energy Dept. has taken a bold step with decision to private franchise 9 MP district’s Power Distribution simultaneously. This is unique as there is less than 9 total operational Input based Power Distribution Franchisees (DF) pan India at the district level scale while the model is still emerging. The associated officials and transaction advisory have incorporated good learning in current RFPs for the 9 districts from previous awarded Distribution Franchisee RFPs (across India) and emerging Distribution Franchisee implementation scale-up issues. There is appreciable effort from Energy Dept GoMP to engage various stakeholders to raise a strong and standardized Distribution Franchisee model.

A second revision in RFPs was made post first pre-bid conference after consulting with participating prospective bidders (See first pre-bid conference minutes). A second pre-bid conference was organized in Bhopal on 25th August jointly for all 9 districts. The meeting was chaired by Hon. Energy Secretary GoMP, Mr. Mohd. Suleman and was attended by overwhelming 20+ prospective bidding companies. pManifold participated in this pre-bid conference based upon their relevant work in the Distribution Franchisee space and having collected valuable customer satisfaction data on local electric utilities performance in the 9 MP districts.

Some key points of discussion raised by Licensee (the utility) for opinion from participating prospective bidders were:

1. If and how utility not only avoid financial losses as established in baseline, but also make profits in a truely win-win Distribution Franchisee model in long term?
2. How could utility protect its and its end-consumer's interests better while in Distribution Franchisee long term contractual arrangement? In specific what could be better contract and company structuring - whether utility should sign contract with SPV (Special Purpose Vehicle) or the Parent company?
3. If and how 'urban' and 'rural' Power Distribution Franchisees could be clubbed together? In specific with current all 9 MP districts having high rural characteristics, how bidders look upon viability of a combined Distribution Franchisee model at entire district level?

It was encouraging to see the utility's Top Management and participating prospective bidders recognizing 'Customer Satisfaction' as the most important performance objective for Distribution Franchisee. In light of this, there was discussion to add some mandated customer services in the RFP and DFA in addition to current 100% Electronic Metering, Billing and Payment as part of Capex roll-out plan. 

Chhattisgarh also on Distribution Franchisee map - New tender/RFP for Baloda Bazar, Raipur

Chhattisgarh also has entered into the race of Power Distribution Franchising with its announcement of one of Raipur O&M Division named Baloda Bazar. The size of the project is smaller than all the recent 9 districts Distribution Franchisee in Madhya Pradesh (See our earlier blog 'Upcoming Projects of Power Distribution Franchisee in Madhya Pradesh'). The project is announced under RGGVY program.

CSPDCL, Raipur announced the tender on 30-07-2011 and has 25-08-2011 as bid close date. Comparing to earlier Power Distribution Franchisee tenders, this seems to be the shortest time duration tender, given amongst the first experiments for CSPDCL.

Some key characteristics of the tender:

1. Tenure for Input based Franchisee tender is 5 years
2. No input minimum benchmarking rates provided
3. High distribution losses of the order of 63.41% (Annual Input energy of the order of 250 MUs with Revenue billed approx. Rs. 18 crores)
4. Scattered area 4794 sq.kms
5. Low Peak demand of 43 MW
6. High Collection efficiency (almost 100%). (This reflects that unmetered sales is primary cause for high losses)
7. BPL consumers are highest in numbers (almost 54% of total consumers, but contributing only 12% to total connected load and 0% to revenue collected as totally subsidised)
8. 18 number of 33 KV substations (total capacity 76.45 MVA, mostly of 3.15MVA power transformer)
9. Approx. 25784 LT poles and 1273 Distribution Transformers (DTRs)

The qualifications for the bid is easier for new entrants. 

What is to be looked is innovation in Rural Distribution Franchisee to make it emerge as viable model and sustain RGGVY efforts. 

Reference:

• Baloda Bazar (O&M Circle) Distribution Franchisee RFP
• Baloda Bazar (O&M Circle) Distribution Franchisee DFA

Three key comparative findings from Customer Survey Results of Gwalior, Datia & Bhind

This is a comparative view of top level findings developed using the location specific reports of Gwalior, Datia and Bhind available here along with 6 other districts in Madhya Pradesh (MP).   


Regional traits like urban/ rural development differentiation are strikingly clear; Customer satisfaction lowest in Bhind

In the overall scheme of things,

• Bhind district scored a dismal 26.96
• Gwalior district scored 52.41 & 
• Datia district scored 58.22

Specifically in Datia, the increased score can be attributed to the respondents in the Commercial category who indicated satisfaction on most major factors under consideration especially their comfort with the current Pricing available to them and also their satisfaction with the Power Quality and Reliability. 


While, long hours of load shedding (6-10 hours), frequent unplanned outages, poor infrastructure and maintenance and poor customer services in Bhind specifically constitute its low score. 


Satisfaction of customers is also relative and consistent to the level of customer’s expectations in different regions.

When asked if they agree that “A lot needs to be done to improve the current systems and make me fully satisfied” comparatively least respondents agreed in Datia (55%) than Gwalior (58%) followed by Bhind (91%) where most respondents agreed they are expecting a lot to be done before they get satisfied with the utility services.


Regions where customer’s believed more needs to be done to make them satisfied scored low on customer satisfaction.



Mixed reactions towards privatization of power distribution through franchisee model in Gwalior, Datia and Bhind
When asked if ““Service levels will improve if a private company manages electricity distribution”
In Gwalior 51% respondents agreed
In Datia 36% respondents agreed
In Bhind 83% respondents agreed

Over 70% of respondents from Commercial Category in both Datia & Gwalior disagreed that privatization would help improve service levels.

Over 80% of respondents in Bhind, both in Residential and Commercial categories, agreed that Privatization will help improve the current situation.

For individual reports on each region, please get in touch with Rahul Bagdia, +91 956 109 4490, rahul.bagdia@pManifold.com.

Update: Rescheduling of Distribution Franchisee tenders in Madhya Pradesh

A previous blog covered the market status of on-going and upcoming projects in Power Distribution Franchisee in Madhya Pradesh (MP).

As per the latest tender notices, Submission Dates has been revised for all the 9 districts in MP.

Another Pre-Bid Conference is scheduled on 25th Aug 2011 for all the 9 districts. The table below provides the revised dates for all the the 9 districts.

(Click on image to see the enlarged view)

References:

• Last Pre-Bid Conference Update - http://www.madhyavitaran.nic.in/Franchisee_Pre%20Bid-%2023Jul11.pdf
• Direct Links for each districts extension in Due Dates can be had from following links - 
• Gwalior, Datia & Bhind - http://www.madhyavitaran.nic.in/Extension_Date_11Aug11.pdf
• Shajapur, Ujjain & Dewas - http://www.mppkvvcl.org/html/td_cmd_se_bd_12308_extension_x03.pdf
• Satna - http://www.mp.gov.in/energy/mpseb/tender_files/RFP-satna-SBD-110811.pdf
• Sagar - http://www.mp.gov.in/energy/mpseb/tender_files/RFP-sagar-110811.pdf
• Narsinghpur - http://www.mp.gov.in/energy/mpseb/tender_files/RFP-Narsinghpur-SBD-110811.pdf

  

Launched: Electric Utility Madhya Pradesh - Report Series 2011

As you know we have been working since the last couple of weeks on capturing the latest insights from electricity customer across upcoming Power Distribution Franchisee areas in Madhya Pradesh, India specifically the regions of Bhind, Satna, Shajapur, Gwalior, Sagar, Dewas, Datia, Narsinghpur & Ujjain.


This 'first of its kind' report series attempts to raise the local customers voice, to enable the distribution franchisee & utility stakeholders to monitor the local situation, identify key priority actions and plan investments & road maps accordingly.

Key features of the report are:

• Most recent, independent, “indicative, land based, face-to-face” survey providing the customer’s perspective of local electricity utility performance with satisfaction scores, opinions including Distribution privatization and customer preferences (example: preferred mode of payment, communications etc.) with detailed GIS visualization.
• Most comprehensively parameterized, customer centric “indicator” of the effectiveness of utility performance on 28 well-chosen attributes that appropriately represent key areas like power quality, reliability, metering, billing, payments, information systems and customer services
• Comes along with Additional independent primary and secondary research for Local Electricity Utility stakeholders specifically Distribution Franchisee bidders and licensees

Download a Snapshot Report which contains details on the Report series including survey motivation, methodology, sample results, report data, GIS visualizations and info-graphics.

OR view it below,

Electric Utility Madhya Pradesh - Report Series 2011 - Snapshot

Why Customer's Satisfaction & Preferences are important for Electricity Utilities?

The Forum of Regulators Report on Standardization of the Distribution Franchisee model (September 2010) mentions that the objectives of appointing a distribution franchisee, inter alia,

are:

i. To minimise Aggregate Distribution and Commercial losses

ii. To bring improvement in Metering, Billing and Revenue Collection

iii. To minimise Current Assets on account of arrears

iv. To enhance customer satisfaction level by improving quality of service

Placing focus on the fourth point, we find that while much information is shared in the Distribution Franchisee RFPs, they hardly provide any information on the current customer satisfaction levels nor the customer's perspective of the network infrastructure, current quality of services etc. This is a stark thing to miss considering all CERC, CEA, State ERCs and State Discom's mandate Improving Customer Satisfaction as one of the 4 objectives of a Power Distribution Franchisee. The reason probably for the miss is that the areas being offered for franchisee are any way loss making and hence customer dissatisfaction is well understood.

However, while all utilities, licensees and potential or current distribution franchisee operators try to improve quality of service; could efforts to understand the customer's perception and expectations from the utility help the utility make more quality decisions to improve the services and have a happy, paying customer?

The answer probably is a big "Yes". Measuring customer satisfaction - using a structured methodology that relates the customer responses with consumer demographics and key factors/attributes affecting business performance - is probably the only way of independently & periodically benchmarking effectiveness of utilities operating in same or different zones. No doubt a number of such mechanisms have evolved and established themselves in the western countries where multiple state / private companies operate in the same locality.

But how really could measuring customer satisfaction or proactively identifying customer preferences help? We believe, they could in the following key ways,

Local Insights on Datia City's Electricity status quo - New district for proposed DF in Madhya Pradesh

Datia is one of the 9 districts which will host Distribution Franchisee in Madhya Pradesh. It is the smallest district in Madhya Pradesh with people there have low paying capacity. Below is brief top line capture from interviews with local utility people:

• Datia city as a whole has 1 payment collection center. With growing needs, this is in phase of augmentation to 3 more centers for ease of consumers. 
• City has 12 subdivisions (areas outside city limits) where there are 12 payment collection centers, one for each.
• Load shedding is approx 6 hours in city and around 8-10 hours in subdivisions.
• 20% of the locations in the city are prone to electricity theft.
• Average loss on twelve of 11KV feeders is 60%.
• Local utility has initiated steps like organizing camps for awareness in consumers and as a result were able to add 250 new connections.

More details with local intelligence on all 9 MP districts is available with pManifold Distribution Franchisee practice.

Posted by: Kunjan Bagdia @ pManifold

Local Insights on Gwalior City's Electricity status quo - Field interview with utility ground staff

pManifold team as part of its new initiative to increase local intelligence and know-how of new proposed 9 Distribution Franchisee sites in Madhya Pradesh, is conducting a methodical stakeholder surveys with more than 1000 samples across 9 districts. The stakeholders includes end-consumers categorised into Residential, Commercial, Industrial and Agriculture; utility ground staff - lineman and substation operators; and utility senior management. More details on the methodology and parameters captured for measuring Customer Satisfaction could be looked at http://web.pmanifold.com/insights/electric-utility-customer-satisfaction-2011.

Some high level capture of important observations when speaking to local utility ground staff in Gwalior city: 

• Most frequent problem in the city is of fuse-off calls, which comprises around 70% of the problems for the local lineman.
• On average, a lineman receives approx 30-35 complaints in a day, out of which 20-25 could be attended.
• Use of Air Breaker (AB) switch is only on 20% of DTCs. The results are encouraging to support further augmentation of AB switches in the network.
• Call centre facility for consumers is available for registering complaints.

More detailed observations and results are available in our new series of reports. 

Posted by: Kunjan Bagdia @ pManifold

Local Insights on Gwalior City's Electricity status quo - New district for proposed DF in Madhya Pradesh

Madhya Pradesh has released the Request for Proposal (RFPs) for Power Distribution Franchisee in 9 districts. See our earlier blog.

In order to have more ground learning of the local area, our team member visited the Gwalior city & interacted with utility Engineers and Lineman to capture their perspective of electricity utilization.

Following are the few excerpts:-

• There are about 120 11Kv feeders in city circle, out of which 40-50 feeders have more than 60% losses because of only one primary reason i.e. theft.
• Installation of New Connections has been taken seriously by District Collector and initiated steps like Lok Seva Guarantee, Jan Mitra Kendra
• Within Gwalior City, there are around 25 collection centers.
• There are 17 rural areas that comes under Gwalior Circle & each area has 1 payment collection center. In total, there are around 17-20 collection centers, with few areas has more than 1 center.
• Government has released the tender of Any Time Payment (ATP) machine for enhancement of customer services.

More details with local intelligence on all 9 MP districts is available with pManifold Distribution Franchisee practice.

Psoted by: Kunjan Bagdia @ pManifold