Aug’ 2012, Goa The 13th Regulators & Policymakers RetreatExperiences in Distribution Privatization Ramesh Narayanan Chief Executive Officer BSES Yamuna Power Ltd.
Presentation Flow Demand Supply Mismatch Generation Reforms 12th Five Year plan Distribution Reforms A Glimpse Challenges Finance Technology Manpower Strategy Innovation For Distribution Turnaround 2 BSES Yamuna Power Ltd.
DEMAND SUPPLY MISMATCH 3 BSES Yamuna Power Ltd.
PROBLEM : Power Demand Constraints Installed Capacity : 2,06,456 MW Grid Demand : 1,25,000 MW Suppressed Demand in the form of Huge piling of the New connection pendency (other than private utilities) More than 30% of the 2 Crs pumpset run on DG Sets Majority of the un-electrified railway corridors (other than main trunk lines) Unavailability of efficient Public transport system : Metro, Monorail etc. HUGE Suppressed & Unaddressed Demand 4 BSES Yamuna Power Ltd.
India Vs China [ Yr 1991 to Yr 2012] CHINA INDIAYEAR 1991 Installed Capacity : 1,50,000 MW Installed Capacity : 66,000 MW Grid Demand : 1,25,000 MW Grid Demand : 57,000 MW Demand Growth : 5 TIMES Demand DOUBLEDYEAR 2012 Installed Capacity : 950,000 MW Installed Capacity : 2,06,456 MW Grid Demand : 7,40,000 MW Grid Demand : 1,25,000 MW Economic Development * Data Source : www.wikipedia.org & other reports 5 BSES Yamuna Power Ltd.
GENERATION : accelerated growth Sou rce : CEA Installed capacity as on Jul’12 : 2,06,456 MW YEAR 1991-92: Liberalization Policy by Govt. of India New Policy Framework to foster Accelerated Growth in Power. Private / FDI participation for the Generation Sector 7 BSES Yamuna Power Ltd.
GENERATION Reforms : EnablersADMINISTRATIVE FRAMEWORK Statutory clearances sized up & streamlined. Investment Promotion Cell in MoP. Time bound clearancesLEGAL FRAMEWORK Standardization of Indian Arbitration & Conciliation 1991: Installed Capacity: 66,00 MW Act, 1996 in line with UNCITRAL, 1976 Ease in Foreign Direct InvestmentsFINANCE FRAMEWORK Concept of SPV / JV / Project based Financing Assured Return on Equity Cost reflective Two Part Tariff Incentives - tax holiday, duties & taxes waivers 2012: Installed capacity: 2,06,456 MW OBJECTIVE : Impetus to the Power GENERATION 8 BSES Yamuna Power Ltd.
GENERATION : Global Ranking 205 India to Rank No 3 by 2017 9 BSES Yamuna Power Ltd.
Over Rs 11,00,000 Crs12TH FIVE YEAR PLAN [ 2012-2017 ]~88,000 MW addition Sector 8th plan 9th Plan 10th Plan 11th Plan 12th Plan Generation Central 50% 24% 57% 34% 28% State 42% 50% 30% 34% 15% Private 8% 26% 13% 32% 57% TOTAL 100% 100% 100% 100% 100% Over 4,50,000 Crs of InvestmentTransmission 1,36,000 CKm of Transmission Lines 2,95,000 MVA of Transformation Capacity Over 2,50,000 Crs of Investment Distribution Cater to additional demand for : 88,000 MW 2.1 times the generation capacity ; Cost: 2.3 Crs / MW Over 4,30,000 Crs of Investment 10 BSES Yamuna Power Ltd.
DISTRIBUTION : A GLIMPSE 11 BSES Yamuna Power Ltd.
DISTRIBUTION Sector : Status Distribution Reform Area Segregation*Including DelhiMajor Private Player engaged as Distribution Licensee Kolkata, Mumbai, Delhi, Ahmedabad, Surat, Greater Noida, Orissa (3/4th of the state)Major Private Player engaged as Distribution Franchisee Agra, Bhiwandi, Kanpur, Nagpur, Aurangabad, Gwalior, Sagar etc. Private Sector Participation a meager 4% 12 BSES Yamuna Power Ltd.
Distribution Losses @ All India Level [FY09] National Average The average AT&C losses (%) National Level for FY 09 : 28.44% (Source : PFC report) 13 BSES Yamuna Power Ltd.
Distribution Challenges Finance Technology Man Power Strategy Innovation 14 BSES Yamuna Power Ltd.
Finance Rs. 2.3 Cr is needed to create 1MW Distribution infrastructure For 1,08,000 MW ( 12th Plan Demand + Existing Gap of 10%), sector requires Rs. 5,20,000 Crores Debt: Rs. 3,65,000 Crs. (70%) ; Equity: Rs. 1,55,000 Crs. (30%) 15 BSES Yamuna Power Ltd.
Finance Dedicated Common Distribution Infrastructure Fund to be floated by government Funds to be made available at attractive rates to Discoms Easy access to funds like JNURM, R-APDRP, RGGVY etc 17 BSES Yamuna Power Ltd.
Man Power Requirement Skill Requirement for 12th plan Requirement• 5 person /MW • For 88,000 • 70% skilled for urban areas MW ( Taking 7 persons per MW) • 4,30,000• 10-15 persons skilled per MW for • 6,16,000 persons rural areas persons needed 19 BSES Yamuna Power Ltd.
Man Power Training & Skill Set Development Knowledge Distribution Specific Attitude Special courses at ITIs, Values/Culture NPTI, IITs and IIMs People interaction 20 BSES Yamuna Power Ltd.
Strategy Raising the per capita Open & flexible consumption of power Energy Markets Reduction of AT&C losses Improving supply & Cost of supply Quality & Reliability 21 BSES Yamuna Power Ltd.
Innovation Research and Development Dedicated centers Separate Fund Arrangement Advanced Research Remote metering Automation (SCADA etc.) People less customer care Safety Money less transaction O&M practices 22 BSES Yamuna Power Ltd.
Comparison : Gen-Trans-Dist Parameter Generation Transmission DistributionCost reflective Tariffswith timely revisionsTax Holidays ;Excise / Import Duties waivers Based on Based on Based onProject Financing PPAs BPAs Balance SheetsTransparency of cost/expenditurein tariff petition Reduce Disparity Across the Power Chain 24 BSES Yamuna Power Ltd.
Supporting FrameworkADMINISTRATIVE FRAMEWORK All statutory support to the discoms for schemes like RAPDRP etc State government assistance for facilitating discoms network infrastructureREGULATORY FRAMEWORK LEGAL FRAMEWORK Realistic approach towards Discom Endorsement of the Electricity Act -2003 Time bound discom cost amortization Theft / misuse of electricity Cost reflective tariffs & support schemes Mitigation of regulatory challenges Discom standards of performanceFINANCE FRAMEWORK Concept of SPV / JV/ Project based Financing Assured Return on Equity Low cost debt instruments for overall sectoral growth Incentives in terms of tax holiday, duties & taxesOBJECTIVE : Provide much needed Impetus to the Power DISTRIBUTION 25 BSES Yamuna Power Ltd.
Approach towards Accelerated Distribution ReformsLender-Discom Partnership (LDP) Model Best Performing REC / PFC / other Utilities (BPU) financial institutions SPV Indulge itself with HIGH OUTSTANDING DISCOMS Discoms to FRANCHISE certain cities to SPV for loss reduction & reforms. The EXISTING DEBT to be converted to EQUITY portion for that franchise BPUs to bring in technical & business efficiencies for the franchisee 26 BSES Yamuna Power Ltd.
Approach towards Accelerated Distribution ReformsWIRE – CONTENT MODELWIRE Business (EPC) Centralized Monitoring (Inline with generation addition) Centralized empanelment for EPC contractor (for discom network creation) New n/w created to be leased to the state discom by the Central agency. State Discom to pay Fixed Cost / Lease rental to the centralized agencyCONTENT Business (State Discom) Power procurement / management Operations & Maintenance of the WIRE business Much needed impetus to the Network Creation 27 BSES Yamuna Power Ltd.