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Petitioning Sri Siddaramaiah, Honourable CM, Govt of Karnataka

Privatise power distribution in Bengaluru and other Karnataka cities

Respected Sir

BESCOM, as also all the other ESCOMs, have been claiming improved performances over the past few years. Even as that may be true, Sir, you'll appreciate that if Bengaluru, and the other Karnataka cities, have to be identified as "smart cities" of the future, the performances of these service providers have a very long way to go. And, it is totally doubtful if they can measure up to the task, given the constraints they are operating under, largely because of government ownership.

The biggest problem they are facing today is shortage of funds, with the government owing them close to Rs 6200 cr against farmer subsidy alone, any given day, apart from other government agencies, municipalities, etc, paying them when able, if paying at all.

Resulting out of it all, the ESCOMs are hardly able to carry on their day to day maintenance work even, leave aside matters like taking up expansion (to meet the exponentially growing demand), technology upgradation, etc. The lack of proper maintenance is in turn leading to many accidents, some fatal, causing courts to order huge compensation payments, apart from suggesting removal of transformers and allied equipment from footpaths, all of which is going to be burdening the ESCOMS even more.

The delayed payment receipts by the ESCOMS are, in addition, leading to their delaying payments to KPCL, the state's mainstay as far as generation is concerned, the dues to it mounting to a colossal Rs 12,000 cr as of now, for an annual turnover of around Rs 6,500 cr. It's a miracle it is even surviving, whereas, had it not been for the extremely harsh deprival of its dues, the company could very easily have geared itself up to meet a major part of the state's overall needs, obviating the need for much of the costly capacity addition that is being talked of now, as also the extremely costly spot energy purchases from the market.

Just a few months back, when the privatised Delhi ESCOMs approached the Delhi High Court for help to prevent the NTPC from cutting off supplies to them, for non- payment of bills on time (because of the Delhi government not clearing its dues to them), the Court refused to intervene. Sensing public anger if the situation got precipitated and black-outs became the order of the day, the government (a 49% stake-holder in the ESCOMS) quickly made arrangements to release the dues to the ESCOMs, and saved the day for itself. In the process, all the stake-holders learned their lessons on financial discipline, and the going has been generally smooth thereafter.

As compared to that, KPCL is unable to take such measures, since the monies owed to them are from government-owned ESCOMs, all of which is leading to a situation of near total financial anarchy across the sector in the state, crippling almost the entire economy in the process, power being a crucial infrastructural area.

It is perhaps in full appreciation of all of this, Sir, that your predecessors had, as far back as in 1997, committed to 'privatisation of distribution', evidenced by a reading of the sub-para titled "preamble", under "reform efforts" on the KERC website. The emphasis on "distribution" was plainly an outcome of the government's perception that it was not in a position to carry out the key revenue collection function, coming under it, diligently, because of political interference. What has transpired since has only reconfirmed the veracity in that stance all the more emphatically. As such, various governments thereafter too continued reiterating the intent, though they did very little towards making it happen, on the ground.

Sir, even as Bengaluru, and other Karnataka cities, have remained stuck in the rut all these years, many cities such as Mumbai, Kolkatta, Ahmedabad, Surat, etc took the leap long ago, and have been enjoying the benefits of quality power since then. And, over the nine years of Sheela Dikshit rule, Delhi too has joined them. Most parts of Delhi today enjoy system reliability of the order of 99.9%, meaning they are beginning to junk their gen-sets, inverters, converters, UPS's, etc, even as, with reliability levels far lower, we in Bengaluru (as also most cities served by government-owned service providers) are becoming more and more dependent on them.

The additional costs in terms of the investment on these equipment, fuel consumed, maintenance, prime urban space occupied, air and noise pollution caused, larger carbon footprint caused, are all making us less and less competitive, even as, prodded on by the Centre's new initiatives, many other cities across the country too are now poised to become 'smart' very soon, an essential component of the scheme being reliable grid power supply.

And, Sir, reliability doesn't necessarily mean higher cost, a fact brought out clearly by a comparison of the tariff levels in Delhi (for 99.9% reliability) and in Bengaluru (for much lower level of reliability). Even the CAG report, pursuant to some allegations of mis-deeds by the Delhi ESCOMS, made by the Aam Aadmi Party, have shown to be of no serious consequence.

The Delhi model can be readily replicated in Bengaluru, after making the necessary tweaking required to take care of local peculiarities. In that respect, firstly, like with Delhi, the city utilities have to cater to the city loads, and not those of Kolar, Chitradurga, etc. All those rural loads have to be tackled in different ways. There too there are good examples, like those in Gujarat, and even our own Hukeri Co-op Society model. Here too, the subsidies whatever could perhaps be credited to the bank accounts of the eligible beneficiaries, in advance monthly installments through Aadhaar, so that they in turn pay the bills upfront, and don't cause the services to fall apart.

Further, Sir, even if the government were to make arrangements to release subsidy and other payments on time, it is not as if everything can fall in place. It is a well recognised fact that there are serious limitations to government's handling these functions directly, with the rapid advancements in technology in today's world, even with most proactive of officers at the helm, and as such it is best made over to professional companies, perhaps with a bit more strengthening of the regulatory mechanism.

All of the above has evolved over considerable debate over a number of years on PRAJA. These may be accessed using following url's :
1) http://praja.in/en/blog/murali772/2008/05/28/imperatives-privatisation-power-distribution
2) http://praja.in/en/blog/murali772/2011/12/24/delhi-power-distribution-privatisation-model-all-cities-follow

I request your immediate furtherance of the matter.

Yours truly,

Muralidhar Rao

 

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