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Discoms told to further cut losses for stable tariffs

Gaurav Vivek Bhatnagar

DERC should concentrate on improving quality of service for consumers: report

NEW DELHI: With the private power distribution companies -- NDPL, BSES Yamuna and BSES Rajdhani -- claiming that they have over the past four years significantly reduced the aggregate technical and commercial (AT&C) losses and thereby saved the Delhi Government over Rs 4,000 crores, Prayas (Energy Group) of Pune has in its report titled "Critical Review of Performance of Delhi's Privatised Distribution System and the Regulatory Process" stressed the need for carrying forward loss reduction with greater vigour and called for stringent monitoring of capital expenditure so that there is no significant increase in retail tariffs.

In its report, Prayas has stated that the reduction in AT&C loss reduction targets in the original bid amount fixed was perhaps due to uncertainty in the amount of losses that could be reduced and the greater risk perceived by the private companies because any failure in meeting the targets would have to be borne by the companies themselves.

Pegging the savings from loss reduction at Rs 880 crores in the past three years, the report has also stated that the tariff increases in the past four years, which cumulatively work out to 23 per cent, were comparable to those of the pre-privatisation era. Also, it said with the average distribution cost of all the three discoms hovering at around Rs 0.50 per kWh, the technical losses have substantially reduced due to the restructuring.

Stating that discoms will launch a more effective drive in cutting down commercial losses through a series of coordinated measures like deployment of increased police force, registration of more cases of theft and functioning of special courts which would start functioning soon, the report also stressed the need for addressing the discrepancies -- pertaining to errors in data, shifts between consumer categories and limitations of billing software -- in the average billing rate and the performance of the companies.

The report has also called upon the Delhi Electricity Regulatory Commission to concentrate on improving the quality of service for the consumers and stated that metering, billing and collection systems were the backbone of the distribution business and software and processes should be error-free and reliable and this would require periodic third-party audit and certification.

The report assumes significance in the light of claims made by the discoms. Earlier in June, NDPL had announced that it has over-achieved its loss reduction target for the second year in a row and that that it has achieved in less than four years the target of reducing losses by 17 per cent, for which a five-year time frame had been given as per the privatisation agreement.

NDPL also said that in 2005-06, the aggregate technical and commercial (AT and C) losses, which includes loss due to theft, have been brought down to 28 per cent against a regulatory target of 35.35 per cent, down from 53 per cent at the time of takeover in July 2002.

It has also been claimed that privatisation has saved the government around Rs 4,000 crore since 2002 of which BSES had saved around Rs 2,400 crores due to reduction in AT&C losses and that BSES Rajdhani Power Limited and BSES Yamuna Power limied that reduced the AT&C losses by a record 16.5 per cent and 19.5 per cent respectively.

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