Odisha utility scripts major fall in power losses in rural areas
Bhubaneswar: A private electricity distribution company (discom) is scripting a remarkable story of cutting its aggregate technical and commercial (AT&C) losses in rural Odisha, which remains one of only two states not to have joined the Centre’s Uday debt restructuring scheme for the hugely indebted Indian state discoms.
Feedback Energy Distribution Company (Fedco), owned by Gurgaon-based Feedback Infra, has successfully achieved an average 23 per cent reduction of AT&C losses in the four years it has been operating in Odisha. For a discom that operates in an area that is 90 per cent rural, this is the steepest-ever reduction in AT&C losses achieved in the country, it claims.
“We have reduced AT&C loss to the extent of 18-28 per cent in areas with 90:10 rural urban combine in the four divisions that we have been operating in four years,” Managing Director Devtosh Chaturvedi told reporters here during a tour of some areas in the company’s jurisdiction.
“The starting losses were in the range of 55-60 per cent and we have brought it down to 30-35 per cent. We have also doubled the consumer collections, meaning more revenues for the government,” he said.
In Odisha, Fedco operates in Khurda, Nayagarh, Puri and Balugaon divisions falling under the Bhubaneswar circle. The tour for journalists included a visit to the Puri Jagannath temple illuminated at night in all its splendour.
One of the four most sacred temple pilgrimages among Hindus, the “pandas” or priests at Jagannath make up the foremost community of Puri. They live in areas around the temple and used to be among the major defaulters on electricity bills before Fedco came on the scene, Chief Executive Samarjit Mohanty explained.
Behind Fedco’s success is its outreach to consumers through what it calls its “community engagement” division, which engages with “difficult” defaulters, even as the discom developed a reputation for quickly attending to outage complaints without needing to be bribed.
“From 91 most difficult villages in 2014 in Fedco areas… the number has now come down to 31,” Mohanty said, attributing community engagement as a key factor behind the turnaround in AT&C losses.
The AT&C reduction is the second-best by any power distribution franchisee after that by Torrent Power at Bhiwandi in Maharashtra, Chaturvedi pointed out.
In fact, Fedco’s entry into Odisha in 2013, following the devastation caused by cyclone Phailin, came with a massive act of community engagement, where the discom erected over 4,000 electricity poles to resume power supply in record time in the devastated rural areas.
Odisha is the only state with private franchisees engaged in rural power distribution, and was the first to adopt the privatisation model in distribution way back in 1995.
Fedco’s USP is its record in bridging the rural-urban divide and taking up distribution in non-urban, “problem” areas. It is predominantly a rural utility with only 10 per cent area in urban segments.
“Most discoms are wary of the challenges in collecting dues in the rural areas. Instead, in these three years, Fedco has doubled its annual cash collection to nearly Rs 400 crore,” Chaturvedi said.
Fedco is a distribution franchisee of Odisha’s state-run Central Electricity Supply Utility (CESU) under the management-operator model. Here, while the entire capex investment is made by the government, the responsibility and accountability, including reducing AT&C loss, customer service and the introduction of new technology, rest with the private company.
Fedco has a customer base of over 530,000, to which there is an annual increase of three per cent, or 15,000 consumers, company officials said.
Chaturvedi explained that Fedco’s record in turning around the gap between power purchase cost and revenue collection, as well as in providing customer satisfaction, had spread by word-of-mouth, enhancing its reputation in rural areas.
“In these three years, the power purchase cost in our four divisions has come down below the revenue collection. While our realisation per unit (RPU) of energy figure was 1.71 in 2013, it is now up at 2.71,” he said.
“The agreement with Fedco has resulted in substantial benefits in the way of assured revenue, better customer service, AT&C loss reduction and technical innovation through IT infrastructure,” said P.K. Sahu, Superintending Engineer, CESU, which is the government part of this public-private partnership (PPP).
As for the the Ujwal Discom Assurance Yojana (Uday) debt restructuring scheme the central government launched in 2015, Odisha (as also West Bengal) has not joined it because it is one among the few that has never subsidised discoms, Chaturvedi pointed out.
“The state will not feel the pinch of not joining Uday because it has never given subsidy to discoms. The power in Odisha is substantially hydro-electric, the generation cost of which is quite low in comparision,” he said.