Bihar Distribution Franchisee Updates: 2 LoIs issued in March

Bihar State Power Holding Company Ltd (BSPHCL), the state owned Power Distribution utility has recently issued Letter of Intent (LoI) of Distribution Franchisee of Muzaffarpur and Bhagalpur regions to Essel Utilities and SPML respectively. The LoIs has been issued in March 2013.

Tender for appointment of distribution franchisee in PESU & Gaya regions has been cancelled. It is expected that BSPHCL will float new tenders for these 2 regions soon.

We wish the winning two companies successful operationalization so that the DF model achieves its potential.

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Posted by - Kunjan Bagdia @ pManifold

Comparative View of Key Performance Indicators across Gujarat’s Power Distribution Utilities

Paschim Gujarat Vij Company Ltd. (PGVCL), the largest Power Distribution Utility, compared to other distribution utilities in Gujarat, is serving more than 47 lakhs customers, across 8 districts and 44 divisions. The utility PGVCL has considerable losses (both Aggregate Technical & Commercial (AT&C) and Transmission & Distribution (T&D)) compared to other utilities and hence, is evaluating different options of Public Private Partnership (PPP) models to improve the operational efficiency and performance monitoring. They are evaluating various models including the Input Based Distribution Franchisee (IBDF), Light Capex new Orissa model and others. To have a detailed understanding of IBDF model, a team of PGVCL recently visited MSEDCL’s office in Mumbai for a deeper study on the model.

pManifold has done a quick market research to understand the performance of Gujarat’s distribution utilities on key parameters using its DF Attractiveness Matrix. The data used is of the FY 2011-12.

Key excerpts are mentioned below:

• PGVCL has highest area compared to other utilities, covering scattered geography with 8 districts and 44 divisions. 
• Total number of customers is double in PGVCL as compared to others, with highest percentage of Agricultural customers (i.e. ~11%) followed by UGVCL with (~8%). 
• Losses are highest in PGVCL, compared to others due to larger proportion of agriculture sales. Due to this, the state regulatory has set trajectory of 2% loss reduction per year for PGVCL and 1% for others.    
• Average cost of supply (ACS) is highest for PGVCL and its sales realization is least. 
• Quarterly Transformer Failure rate is also highest for PGVCL. 

Apart from the above points, based on the analysis of tariff reports, it is observed that the tariff for domestic and agriculture customer categories has remained at 70-80% and 20-30% of the average cost of supply, while the non-domestic and industrial categories pay in the range of 120-150% respectively, across different utilities. Thus, non-domestic and industrial revenues continue to cross subsidize agriculture and domestic categories.      

With a view to reduce the losses and improve the overall system efficiency, PGVCL has taken a good initiative to understand more on the Distribution Franchisee model. We hope that the preliminary thoughts picks up more traction in coming time period so that the DF model develops further and reach to its potential.

Posted by - Kunjan Bagdia @ pManifold

Interview with Mr. Ajai Nirula, COO at TP-DDL on PPP models for Power Utilities in India

Mr. Ajai Nirula, Chief Operating Officer (COO) at Tata Power - Delhi Distribution Limited (TP-DDL) was one of the sessions moderator in recently concluded IUKAN 2013. As a veteran in the Power industry, he shared his inputs on various distribution reforms and the challenges associated with it.

1. What are the current trends in PPP models for Power Utilities in India? 
• Presently, three business models are in existence i.e. Privatization, Franchisee Based (Unit Based Input Model) & Concession Based (Now recommended by Planning Commission)
• Franchisee Based Model: Operates in designated areas, responsible for network maintenance, for a fixed period (generally 15 Yrs.), Bidding is done on price you pay for per unit power purchased
• Concession Based Model: Fix tenure for 25 Yrs., Bidding party gets a license to operate in the area, bidding is done on viability gap funding concept
• Privatization Model (Delhi/Orissa): Responsible for AT&C Reduction & maintaining reliability of network, licenses to operate in designated areas, asset valuation at a notional value, incentivization on overachievement of targets, Governed through a regulator