LIVE TV
Odisha
Recommended Stories
Bhubaneswar: Eighteen years after the failure of power discom privatisation in Odisha, the acquisition of CESU (Central electricity Supply Utility) by Tata Power signals a new beginning in the State's power reforms.
Significantly, Delhi, where Tata power is a discom utility, and Odisha have privatised their electricity distribution almost around the same time. While the privatisation experiment failed in Odisha, it emerged successful in Delhi.
Why the experiment failed in Odisha? When Delhi government entered into a contract with the private entities that entailed an obligation to reduce AT & C (aggregate technical & commercial) loses annually, the agreement Odisha government entered into with US-based power entity AES and BSES without any such obligations.
The result: As per Kanungo Committee report, set up by Odisha government then, the privatisation of discoms failed to bring down the high T& D (transmission & distribution) and AT&C losses in the State. The AT &C loss increased to around 44 per cent in 2001. Power tariff increased by 40 per cent between 1998 and 2001. It's the year when the privatisation of discoms had been dismantled by the Odisha government. A half-decade later the State government dismantled the Southco &Wesco privatisation.
A glance at the AT & C loss, post the formation of CESU reveals that the loss value in its service area has dropped by 9.4 per cent during the period 2007-19. The AT&C loss in 2007 was estimated at 39.90 per cent and the value in 2018-19 stood at 30.49 per cent.
However, as per submission before OERC (Odisha Energy Electricity Commission), CESU has stated that the actual AT & C loss during the first six-months of 2019-20 stood higher at 37.84 per cent.
The rise in AT&C loss is primarily attributed to non-capex (capital expenditure) on power infra under CESU.
In contrast, Tata Power Delhi Distribution Limited (TPDDL), which was contractually obligated to reduce AT&C losses by 19.25%, was able to pare the losses by 25.72% between fiscal year 2002 and 2007, reveals a recent Niti Aayog report titled 'Diagnostic study of the power distribution sector' released earlier this year. The AT& C loss in service area of Tata Power in Delhi now stood at 9 per cent. The reason: these utilities have invested there in a big way.
Therefore, as per power consumer experts, unless the new privatisation has any such clause, which means reduction of AT&C loss by the discom utility at a fixed proportion annually, then only the privatisation of discom will bear fruit.
In contrast, if the contract has no such clause, then to prune the losses, the discom utility will pass the burden to consumers, either in the form of tariff hike or a spike in fixed charges.
A look at the balance sheet of CESU tells a bitter tale. The transmission & distribution (T&D) loss under CESU in 2018-19 stood at 28.15 per cent. During the year 2015-16, the value was 33. 42 per cent. Under the UDAY scheme, Modi government has mandated to bring the T& D loss to 15 per cent by 2018-19. As per CESU projections, the Aggregate Revenue Requirement (ARR) deficit in distribution for the fiscal year 2020-21 is a whopping Rs 352.34 crore.
Footnote: Though government's objective behind privatisation is to pool private investment into power distribution arena, the high AT & C, T&D losses together with high cross subsidisation may have a bearing on the cost of power purchase, which may pinch consumers via tariff hike unless remedied.
