How Delhi Discoms Reduced Their Losses: Lessons for the Power Sector
The power sector in India has witnessed significant transformation over the years, with many state-owned power utilities struggling to keep up with the increasing demand for electricity. In contrast, private discoms have shown considerable improvement in operational efficiency and financial viability. The case of Tata Power Delhi Distribution Limited (TPDDL) provides valuable insights into how Delhi Discoms managed to reduce their losses through various measures.
TPDDL is a private licensee that distributes power to over seven million consumers in North and North-West Delhi. The discom was formed in 2002 as a joint venture between Tata Power and the Government of Delhi. Since then, it has consistently improved its operational efficiency and reduced its losses. Here are some of the measures that TPDDL implemented to achieve this feat:
- PPP Model: The introduction of a Public-Private Partnership (PPP) Model in 1999 was the first step towards reforming the power sector in Delhi. Under this model, TPDDL and BSES were awarded distribution licenses for Delhi Discoms, which enabled the transition to private licensee.
- Management Reforms: TPDDL implemented several management reforms to streamline its operations and improve its performance. These measures included the formation of a Corporate Strategy Planning and Performance Management Group, implementation of a Distributed Leadership model, transfer of state utility employees to TPDDL with benefits, and the creation of a three-tier performance management system.
- Technology Measures: TPDDL leveraged technology to improve its operational efficiency and reduce its losses. These measures included GIS mapping of assets, installation of AMR meters and tamper-proof static meters, and implementation of SCADA Control Systems.
The result of these measures was a significant improvement in TPDDL’s operational efficiency and financial viability. The discom reduced its Aggregate Technical and Commercial (AT&C) losses from 45% in 2001-02 to 9.1% in 2018-19, and the ACS-ARR Gap (₹ /kWh) from 0.61 in 2009-10 to -0.21 in 2018-19. The successful reduction in AT&C losses enabled TPDDL to operate with a profit margin, thereby improving its financial viability.
The success story of TPDDL provides valuable lessons for the power sector in India. The key takeaways from TPDDL’s case are as follows:
- Institutional Reforms: The power sector needs institutional reforms to improve operational efficiency and reduce losses. The introduction of PPP models and private licensee can enable such reforms.
- Management Reforms: Management reforms can play a critical role in improving the performance of discoms. The creation of dedicated teams for strategic planning, performance management, and technology adoption can help discoms achieve their goals.
- Technology Adoption: Technology adoption can improve operational efficiency and reduce losses. Advanced metering infrastructure, SCADA systems, and GIS mapping of assets can help discoms manage their operations more efficiently.
In conclusion, the case of TPDDL highlights the potential for improvement in the power sector through institutional, management, and technology reforms. Such measures can enable discoms to reduce their losses, improve their financial viability, and provide better quality power to consumers.