Service Management Public Utility Services

UNIT 2UNIT 2
MR.T.SOMASUNDARAMMR.T.SOMASUNDARAM
ASSISTANT PROFESSOR,
DEPT OF MANAGEMENT
KRISTU JAYANTI COLLEGE (AUTONOMOUS)
BENGALURU 1Unit 2 – Public Utility Services

UNIT 2: PUBLIC UTILITYUNIT 2: PUBLIC UTILITY
SERVICESSERVICES
Meaning; Scope; Importance;
Types – Water Supply, Electricity
Supply, Natural gas, Telephone
services, Public distribution
services, public transportation
services (meaning and concept);
Role of public utility services in
Indian EconomyUnit 2 – Public Utility Services 2

PUBLIC UTILITY SERVICESPUBLIC UTILITY SERVICES
Introduction:
 It plays an important role in
economic and social life of the
community.
 It provide basic needs of the society such as water,
electricity, transport, etc.
 Public utility are organized as monopolies working
under the control of a public authority.
 It is a distinctive industry and fundamentally a
necessary step towards the welfare of the
community. 3Unit 2 – Public Utility Services

Definition:
“Public Utility is a service in which a tendency to a
local monopoly needs the intervention of a public
authority to defend the interests of the consumers.”
- R.G. Hawtrey
“Public utility refers to any undertaking that meets
the needs or conveniences of a considerable section
of the public and that places the undertaking in a
position, justifying the imposition of control in
return for monopolistic or special privileges.”
- Graham Roper
4Unit 2 – Public Utility Services

CHARACTERISTICS OF PUBLICCHARACTERISTICS OF PUBLIC
UTILITY SERVICEUTILITY SERVICE
Some of the characteristics features are:
1. Supply of necessaries – it is engaged in supply of
indispensable products and services to the society at
reasonable prices without any discrimination. (E.g.) water,
gas, electricity, etc.
2. Monopolistic Position – it is monopolistic or semi –
monopolistic position (i.e.) they enjoy natural monopoly.
- granted legal monopolies place them in a secured
position.
- field of operation is generally limited in a particular area
or region.

3. Inelastic Demand – demand for goods or services is
generally inelastic.
- the demand may increase, but in no way it will decrease.
- risk involved in public utilities is very little.
4. Huge Capital Investments – it requires a large capital for
procuring equipment and installing machinery.
- they have to meet heavy charges on account of
maintenance, repairs and replacements.
5. Franchise – it is generally granted a special franchise by
Governmental authority before they commence.
- it is nature of grant of certain powers, rights, privileges
and immunities by a competent authority.
(E.g.) water supply concern can make use of the roads or
streets for laying water pipes.

6. Regulation and Control – it has numerous powers
for its attainment, they are supposed to work for
maximum social advantage.
- it relate to fixation of prices, determination of
quality, regular and adequate supply of services,
etc.
7. Absence of Middlemen – this is an another
distinguishing feature of public utilities.
- goods are supplied to the consumers directly.

IMPORTANCE OF PUBLIC UTILITYIMPORTANCE OF PUBLIC UTILITY
SERVICESERVICE
1. Supply essential goods and services:
- it would be hard for people to live each day without these
services.
(E.g.) water and electricity for household needs.
2. Promote good quality.
- customers get worth the money they pay for these services.
- public can afford to pay for the utilities since they know that
everything is worth their money.
3. Promote Strict Regulations:
- there should be strict rules in quality of goods and services
provided to the public.
- any deficiency leads to serious social problems.

SCOPE OF PUBLIC UTILITYSCOPE OF PUBLIC UTILITY
SERVICESSERVICES
 It provides a number of welfare and social security
services to the people.
 It has to manage government owned industries and
regulate private industries.
 It covers every area and activity within the ambit (domain
or field) public policy.
 The scope of public utility is very wide in modern state.
 It has been targeted at acceleration of economic
development with social justice.
 It flows from strategies and policies governing economic
development and the structure of economic system of a
country.

RIGHTS OF PUBLIC UTILITYRIGHTS OF PUBLIC UTILITY
SERVICESSERVICES
1. Rights to charge reasonable price for the products
or services rendered by them.
2. Right to withdraw the supply of goods or services
after giving due notice to the consumers who fail to
pay the price.
3. Right to use public and private properties. If they
make use of the private property, reasonable
compensation must be paid. This right is called as
“Eminent domain”.

FORMS OF PUBLIC UTILITYFORMS OF PUBLIC UTILITY
UNDERTAKINGSUNDERTAKINGS
 It depends upon the nature and type of service provided by
them.
 The ownership of public utility is always preferred to be in
government heads.
 It ensures regular supply of these services without any
discrimination to consumers.
 It also helps to protect the interests of consumers.
The three forms for public utility undertakings are –
1. Public authority.
2. Private company operating under limited monopoly.
3. Joint ownership concerns (i.e.) Public & Private company.
4. Public utility trusts. 11Unit 2 – Public Utility Services

DUTIES OF PUBLIC UTILITIESDUTIES OF PUBLIC UTILITIES
The duties of the Public Utilities are the following -
1. Service to All:
- it must offer its services to all who apply for such services,
regardless of caste, race, economic or social status or other
differences.
2. Adequate Service:
- it should render adequate services so as to fulfill the demands made
by public in its jurisdiction.
- it must provide prompt service.
3. Reasonable Price and Conditions:
- goods and services under normal conditions must be supplied at a
reasonable price.
4. No Unjust Discrimination:
- there should not be rate differentials based on a fair or classification
of customers. 12Unit 2 – Public Utility Services

PROBLEMS OF PUBLICPROBLEMS OF PUBLIC
UTILITIESUTILITIES
The public utilities are confronted with certain peculiar
problems –
1. Organization:
- public utilities are generally organized as limited
companies or statutory corporations. Smaller concerns are
generally established as companies.
2. Ownership and Management:
- it is originally vested in the hands of private individuals.
- public control has emerged slowly and lately in the
history of these privileged bodies.
- now-a-days public utilities are owned and managed by
private individuals as well as by state. 13Unit 2 – Public Utility Services

The forms of management and ownership of public utilities
can be divided into following five classes –
a) Public authority having public ownership and operation (i.e.)
Municipalities, State & Central Governments.
b) Private company operating under a limited monopoly.
c) Public utility Trust.
d) Mixed undertaking composed of private and public capital.
e) Private Individuals.
3. Plant Location and Size:
- size of public utility concern is generally large.
- huge capital is required for procuring the machinery,
equipment, etc.
- they have to start their operations at the full swing in very
beginning itself and gradual expansion.

- choice of location is generally confined to site selected or
allotted by Government, as they require large space for
their operations.
4. Determination of Prices:
- rate charged by concern must be fair and reasonable.
There are three broad aspects in price policy of these
undertakings are:
a) Promotional Aspect – this is concerned with adoption of
policy, which promote demand for services offered by
undertaking.
- the undertaking can utilize its maximum available
capacity.
(E.g) concessional rates to regular customers or special
classes of consumers, etc.

b) Price Discrimination – it can follow
discrimination policies based on the division of the
market, consumers, etc.
- the price discrimination should not do injustice to
any section of the society.
c) Social Considerations – it must be given
importance in determining the price policy rather
than those pure economic considerations as it is
based on public interest.

TYPES OF PUBLIC UTILITYTYPES OF PUBLIC UTILITY
SERVICESSERVICES
17
Types of
Public Utility
Services
Water Supply Services
Electricity Supply
Services
Natural Gas Supply
Services
Telephone Services
Public Distribution
Services
Public Transportation
Services

1. WATER SUPPLY SERVICES1. WATER SUPPLY SERVICES
Common terms used in Water Supply:
Aquifer - an underground zone or layer,
which is a relatively good source of water.
It is a rock formation that bears and yields
water when penetrated by wells.
Confined water - groundwater held
between two layers of impermeable rock.
Eye of the spring - opening where the
water comes out of the earth.
Free water - groundwater which can
move without hindrance in response to
the force of gravity.

Raw water - water that has not been purified.
Palatable water - water that is pleasant to drink because its
taste is good but it may not be safe to drink.
Pollution - the presence of matter whose nature, location, or
quantity produces undefined environmental effects.
Potable - safe for drinking, free from pathogens which are
introduced to the water through feces, dirty containers, etc.
Sedimentation - the action of settling down or depositing
matter in a liquid.
Turbidity - disturbed, muddy appearance of water.
“Water Supply is the provision of water by public utilities
commercial organizations, community endeavors or by
individuals, usually via a system of pumps and pipes.”

Overview of Water Supply:
Water supply systems get water from a variety of locations
after appropriate treatment including ground water (aquifers),
surface water (lakes and rivers) and sea through desalination.
Water treatment takes place through purification,
disinfection through chlorination and sometime fluoridation.
Treated water either flows by gravity or pumped to reservoirs,
which indicates the efficiency of drinking water distribution.
Importance of Water Supply:
The following points elaborate the importance of water –
1. Water is necessary in promoting personal hygiene and in
cleaning the environment.
2. 70% of human body weight is water and a human being
needs two liters of water per day as minimum.

3. It is important for agriculture, animal breeding and
fishing.
4. Most of the foods that man eats contain water. (Milk –
88%, Egg – 66%, Fish – 80%, Potatoes – 75%, etc).
5. It is essential to run industries.
(E.g.) it takes 600 liters of water to produce 1kg of woolen
cloth, 3500 liters of water for 1 kg of dry cement.
6. It’s important for the balance in ecology (i.e.) balance in
relationship between living things and environment in which
they live).
7. Water is a valuable source of energy and capable of
generating hydroelectric power.
8. Water facilitates transportation and navigation.
9. It plays important role in recreation activities.

Continuity of Supply:
- it is taken for granted in most developed countries, but is a
severe problem in many developing countries, where
sometimes water is provided for a few hours every day or
few days a week.
- it is estimated that about half of the population of
developing countries receives water on an intermittent
basis.
Water Quality:
- it has micro – biological and a physico – chemical
dimension.
- there are thousands of parameters of water quality.
- in public water supply systems, water should be
disinfected through the use of chlorination or use of ultra
violet light or undergo treatment, in case of surface water. 22

Water Pressure:
- it may vary in different locations of a distribution
system.
- pressure in urban water system is typically maintained
either by a pressurized water tank serving an urban area,
by pumping water into water tower and relying on
gravity to maintain a constant pressure in system.
- effective pressure also varies because of pressure loss
due to supply resistance even for same static pressure.
- gravity water has a small pressure so needs wide
pipes to allow for higher flows.
- booster pump or hydrophore is installed to increase
and maintain pressure.
23

SOURCES OF WATER SUPPLYSOURCES OF WATER SUPPLY
1. Ground Water:
“Ground water may be defined as that portion of the total
rainfall which has saturated downward into the permeable
space in the soil and rock where it remains, or form which it
finds its way out to the surface.”
(E.g.) Wells and Springs.
Advantages of groundwater:
 Free from disease causing micro – organism.
 It can be used without further treatment if properly protected
and treated immediately after completion of construction of
well.
 It is not exposed for evaporation and used as natural storage.
 It is most practical and economical to obtain and distribute.

Disadvantages of ground water:
It needs pumping unless it comes from a spring.
It may contain excess amounts of dissolved minerals.
It is poor in oxygen content.
2. Surface Water:
“Surface water is found non – uniformly distributed over
the earth’s surface. A the rain reaches the surface of the
earth, it becomes surface water or runoff.”
(i.e.) Surface water includes rivers, streams, lakes, ponds, etc.
- the quantity and quality of surface water depend upon
the conditions of the surface or catchment area over which
it flows.”

3. Rain Water:
- in regions where rainfall is abundant and frequent,
rainwater can be a good source of water supply for individual
families and for small communities.
- the storage of rainwater is particularly important in areas
with a long dry season and it can be stored in cisterns or ponds.
Advantages of rainwater:
It is a reliable source even if it rains once or twice a year
only.
It is cheap and a safe means of water supply that may not
need pipes or pumps and is available at doorstep.
It is a system used even in arid and semi – arid areas.
Since rainwater is soft, little soap is needed for laundry
purposes.

Since cistern will be closed container, it will not permit
spreading of diseases found in an unprotected source
like rivers or ponds.
It will be relieved of burden of walking long distances
to fetch inadequate supply.
4. Ocean water:
- it is unfit for human consumption even though it
comprises the largest portion of water on earth’s
surface.
- it is also too salty for irrigation and for domestic
purposes.
- it must pass through a process called desalination (a
process of removal of salt from water), but it is too
expensive to consider. 27Unit 2 – Public Utility Services

Institutional Responsibility and Governance:
a) Policy and Regulation:
- water supply policies and regulation are usually defined
by one or several Ministries in consultation with legislative
branch.
- it is responsible for water and sanitation policy and
standard setting within the branch.
- in some countries, responsibility for sector policy is
entrusted to a Ministry of Environment, Ministry of
Health, Ministry of Public Works, Ministry of Economy,
Ministry of Energy, Ministry of Water, etc.
- policy & regulations includes setting of tariff rules and
approval of tariff, setting, monitoring and enforcing norms
for quality of service and environmental protection.

b) Regulatory Agencies:
- it is needed to protect consumers and to improve
efficiency.
- it is supposed to be autonomous from the executive
branch of Government.
- it was created during 1990s in parallel with efforts at
increasing private sector participation.
- many countries don’t have regulatory agencies for water,
they are directly regulated by local government or national
government.
c) Service Provision:
Water supply services providers differ from each other in
terms of their geographical coverage relative to
administrative boundaries, sectoral change, ownership
structure and their governance arrangements. 29

i) Geographical coverage:
- many water utilities provide services in single city, town or
municipality.
- municipalities have associated with regional or inter –
municipal to benefit from economies of scale.
ii) Sector coverage:
- some water utilities provide only water supply services, while
sewerage is under responsibility of a different entity.
- in some cases, multi – utilities services provides benefits such
as common billing and cross – subsidize water services with
revenues based on certain sector.
iii) Ownership and Governance arrangements:
- water supply providers can be either public, private, mixed or
cooperative.
- most urban water supply services are provided by public
entities. 30Unit 2 – Public Utility Services

iv) Private Sector Participation:
- water supply provided by private or mixed public –
private companies, usually under concessions, leases or
management contracts.
- public firm is legally responsible for service provision to
private sector provider for a period typically ranging from 4
to 30 years.
v) Public water service provision:
- they run without an aim for profit but are based on ethos
of providing common good considered to be of public
interest.
- it currently provide more than 90% of water supply in the
world.
- modest improvement in public water operators have
impact on global provision of services. 31

vi) Governance arrangements:
- it defines the relationship between the service provider,
its owners, its customers and regulatory entities.
- they determine financial autonomy of service provider
and its ability to maintain its assets, expand services,
attract and to provide high quality services.
- water supply is the responsibility of a department that
is integrated in administration of town or municipality.
d) Standardization:
- international standards for water supply system are
covered by International Classification of Standards
(ICS).

e) Comparing the performance of water and sanitation
service providers:
- this is needed, because the sector offers limited scope
for direct competition.
- water utilities frequently shows some utilities on a
sustained improvement and make it as best practice.
- performance of water utilities allows the
stimulation of competition, establish realistic targets for
improvement and create pressure to catch up with better
utilities.
- information about water and sanitation utilities is
provided by International Benchmarking Network for
Water and Sanitation Utilities.

34
Financial aspects of Water Supply services:
a) Costs and Financing:
- cost of supplying water consists, to large extent, of fixed
costs and to small extent, of variable costs that depend on
amount of water consumed.
- full cost of supplying water in urban areas depend on local
costs and local water consumption levels.
- certain costs is usually billed to consumers, remaining
being financed through direct or indirect subsidies from local
or national governments.
- subsidies water supply investments are financed through
internally generated revenues as well as through debt.
- debt financing takes place in form of credits from
commercial banks, credits from International financial
institutions like World bank, etc.

35
b) Tariffs:
- almost all service providers in the world charge tariffs to
recover part of their costs.
- the average water tariff was estimated based on consumption
level of 15 cubic meters per month.
- few utilities do recover all their costs.
- according to World Bank study, only 30% of utilities globally
and 50% of utilities in developed countries generate sufficient
revenue to cover operation, maintenance and partial capital costs.
- water and sanitation tariffs are almost billed together and can
take many different forms.
- tariffs are usually the same for different categories of users and
for different levels of consumption.
(i.e.) industrial and commercial users are often charged higher
tariffs than public or residential users.
Unit 2 – Public Utility Services

c) Metering:
The objectives for metering of water supply
are:
i) it provides an incentive to conserve water
which protects water resources.
ii) it can postpone costly system expansion and saves
energy and chemical costs.
iii) it allows a utility to better locate distribution losses.
iv) it allows suppliers to charge for water based on use,
which is perceived by many as the fairest way to
allocate the costs of water supply to users.
- metering is considered as good practice in water
supply and is widespread in developed countries.

2. ELECTRICITY SUPPLY SERVICES2. ELECTRICITY SUPPLY SERVICES
Electricity Supply:
“It is a component that supplies power
to at least one electric load. It converts
one type of electrical power to another,
but it may also convert a different form
of energy like solar, mechanical or chemical into electrical
energy.”
- it is usually produced by electric generators, but can also
be supplied by sources such as electric batteries.
- it is supplied to homes and business through electric
power grid.

Electricity:
Electricity is a general term that encompasses a
variety of phenomena resulting from the presence and
flow of electric charge.
Sources:
a) Hydroelectric generation which uses falling water
to turn the turbines.
b) Steam generation which uses fossil fuels or
nuclear fusion to make the steam that turns the
turbines.

Electrical Services:
Electrical services is an mode which provides us the
electricity that is required by us to run electrical
appliances, in industries to provide electricity to run the
machineries, in commercial places to run the mechanical
services.
Use of electricity:
Residential Building: Lights , Fans, Heaters,
Television, Refrigerators, etc.
Industrial Buildings: Machineries, Welding,
Electroplating etc.
Commercial Buildings: Lifts, Escalators, Alarm
Systems, Advertising Displays etc.

Schematic Representation of electricity Supply Services:Schematic Representation of electricity Supply Services:

Domestic electric Supply:
The power is supplied to the houses in two different phases
depending upon the need of electricity – i) single phase supply -
240 volts current at 50hz and ii) three phase supply - a voltage
420/240 volts at 50hz.
Single phase supply consists of two wires Live wire (red) and
Neutral Wire (black)
Three phase supply consists of 4 wires three live wires and
one neutral wire.
42Single Phase Supply Three Phase SupplyUnit 2 – Public Utility Services

Process of Electrical Supply Services:

Requirements of good electrical supply (distribution)
systems:
Continuity in the power supply must be ensured.
Voltage must not vary more than the prescribed
limits.( 5%).∓
Efficiency of line must be high as possible.
Safe from consumer point of view.
Layout should not effect the appearance of locality.
Line should not be overloaded.

Distribution (Supply) system is further classified on the basis
of voltage –
a) Primary Distribution System - The part of the electrical-
supply system existing between the distribution substations
and the distribution transformers is called the primary
system.
b) Secondary Distribution System - The secondary
distribution system receives power from the secondary side
of distribution transformers at low voltage and supplies
power to various connected loads via service lines.

Electrical distribution and protection equipment's
(components) for supply services:
1. Step down Transformer. (designed to
reduce the voltage).
2. High tension cables
or Wires. (electric power transmission
at high voltage).
3. High voltage unit.
4. Low voltage room.

5. Feeder Pillar. (to provide electrical services
for low voltage electrical distribution
applications).
6. Distribution board (which divides an
electrical power feed into subsidiary
circuits) and Electric Switchboard
(directs electricity from one or more
sources of supply to smaller regions of
usage).
7. Fuses.
8. Circuit Breaker.

For (E.g.) BESCOM – Bangalore Electricity Supply
Services – Duties and Responsibilities:
BESCOM is vested with the duty of distribution of power to
consumers. In this process, the following supplemental duties
are incidental to main function :
Distribution of Power to consumers at the rates approved by
State Government Tariff Regulations.
Supply at specified voltage and frequency.
Maintenance of 11 KV lines, distribution of transformers and
equipment's to ensure reliable and quality power supply.
Augmentation of infrastructure to meet the demand.
Ensuring safety of Human and animal life by taking suitable
actions to minimize risk of accidents.
Perspective planning of activities in relation to demand and
supply of Power.

In India, some of the Public Electricity Supply Services are –
Assam Power Distribution Company Limited (APDCL).
Andhra Pradesh State Electricity Board (APSEB).
Uttar Haryana Bijli Vitran Nigam Limited.
Dakshin Haryana Bijli Vitran Nigam Limited.
Brihanmumbai Electric Supply and Transport.
BSES Rajdhani Power Ltd, Delhi.
Bangalore electricity supply company.
BSES Yamuna Power Ltd. Delhi.
Calcutta Electric Supply Corporation.
Chamundeshwari Electricity Supply Corporation Limited.
Damodar Valley Corporation.
Dakshin Gujarat Vij Company Ltd. (DGVCL) Surat.

DPSC Ltd.
Goa Electricity Board.
Gulbarga electicity supply company limited.
Hubli Electricity Supply Company Limited.
Karnataka Power Corporation Limited.
Kerala State Electricity Board.
Madhya Gujarat Vij Company Ltd. (MGVCL) Vadodara.
Maharashtra State Electricity Distribution Company
Limited.
Mangalore Electricity Supply Company Limited.
Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company
Ltd.
Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company
Ltd. 50Unit 2 – Public Utility Services

Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company
Ltd.
Manipur State Power Distribution Company Limited.
North Delhi Power Limited (NDPL).
National Thermal Power Corporation.
Neyveli Lignite Corporation.
Noida Power Company Limited.
Paschim Gujarat Vij Company Ltd (PGVCL) Rajkot.
PowerGrid Corporation of India.
Reliance Infrastructure.
Southern Electricity Supply Company of Orissa.
Tamil Nadu Electricity Board.
Tata Power.
 51

Torrent Power Ltd.
Essel vidhyut vitran ujjain pvt. ltd.
Torrent Power Ltd, Ahmedabad.
Torrent Power Ltd, Surat.
Uttar Gujarat Vij Company Ltd (UGVCL) Mehsana.
Torrent Power Ltd, Agra.
West Bengal State Electricity Board.
Enzen Global Solutions Private Limited.
North Bihar Power Distribution Company Limited.
South Bihar Power Distribution Company Limited.
North Eastern Supply Company of Odisha Ltd.
Punjab State Power Corporation Limited.
Power Development Department.

Introduction:
Composition:
Natural gas is a naturally occurring hydrocarbon
gas mixture consisting primarily of methane, with other
hydrocarbons, carbon dioxide, nitrogen and hydrogen
sulfide.
Source:
Natural gas is found in deep underground natural
rock formations or associated with other hydrocarbon
reservoirs in coal beds and as methane clathrates.
Petroleum is also another resource found in proximity to
and with natural gas.
3. NATURAL GAS SUPPLY SERVICES3. NATURAL GAS SUPPLY SERVICES

Definition:
Natural gas is a mixture of gases which are rich in
hydrocarbons. All these gases (methane, nitrogen, carbon
dioxide etc) are naturally found in atmosphere. Natural
gas reserves are deep inside the earth near other solid & liquid
hydrocarbons beds like coal and crude oil.
- it is used as source of energy for heating, cooking and
electricity generation.
- used for vehicles and also in manufacturing industries.
Features of Natural gas:
Cheaper than petrol, diesel, LPG and better mileage.
More in abundance than any other fossil fuel.
Natural gas is the lowest carbon fossil fuel.
Natural gas emits 22% less carbon dioxide than oil and 40%
less than coal. 54

 Can be used in all vehicles from two vehicles to ships
 Natural gas is transportable. Liquefied Natural Gas
(LNG) and long distance pipelines have transformed
global gas markets and increased the breadth and depth of
the global gas trade.
 Can be safely stored and burned.
 Has high heating value of 24,000 Btu (British Thermal
Unit) per pound.
Uses of Natural gas:
1. Power Generation – it is a major source of electricity
generation through the use of gas turbines and steam
turbines.
2. Domestic use – powerful domestic cooking and heating
fuel. 55Unit 2 – Public Utility Services

3. Transportation – it is used in form of Compressed
Natural Gas (CNG) in automobile fuel and Liquefied
Natural Gas (LNG) as alternative fuel for
automobiles.
4. Fertilizers – major use for production of Ammonia
for use in fertilizer production.
5. Aviation – currently running a development
program to produce LNG and hydrogen powered
aircraft so it may be fuel for aviation in future.
6. Hydrogen – it is used to produce hydrogen.
7. Other – it is used in manufacture of fabrics, glass,
steel, plastics, paint and other products.

Natural gas as fuel:
1. CNG – Compressed Natural Gas:
CNG is a fossil fuel substitute for gasoline (petrol),
diesel. It is compressing natural gas (which is mainly
composed of methane CH4), to less than 1% of volume it
occupies at standard atmospheric pressure.
It is mixed with biogas, produced from wastewater,
which doesn’t increase concentration of carbon in
atmosphere.
2. LNG – Liquefied Natural Gas:
It is natural gas that converted to liquid form for storage
or transport. It is odorless, colorless, non – toxic and non –
corrosive. (it can emerge as alternative fuel for heavy duty
vehicles like bus, trucks, ships, etc.)

Comparison between fuels – Petrol, Diesel, Natural Gas, LP
& Electricity:

Natural Gas Processing:

Natural Gas Production, Extraction and Usage across the
world:

Impact of Gas utility planning and investment:
Gas utilities are different than electric utilities in
that we don’t need to plan for and build the
production and transmission components (i.e.) gas
production wells and interstate pipelines.
Gas utilities typically build out their distribution
systems based on current customer needs and shorter-
term projections.
 Inexpensive natural gas does not significantly
change how we plan and invest in our distribution
system.

Growth areas due to abundant and affordable Natural gas:
1. Electric Generation:
Significant switching from older coal-fired generation to
newer combined-cycle gas generation.
Natural gas generation is much cleaner than coal: 50%
lower CO2, 99% less SO2; 100% less Mercury.
Lower gas costs are driving more gas generation now, much
of the future growth in gas generation will be driven by more
stringent environmental standards.
2. Combines Heat & Power (CHP):
An efficient way for customers to produce both electricity
and useful thermal energy.
(E.g.) Engine – driven systems, micro – turbines, fuel cells.

3. Natural Gas Vehicles (NGVs):
Using natural gas in the transportation sector
instead of petroleum.
Growing customer interest in NGVs due to cost
savings and environmental benefits.
Primary initial market – fleet vehicles that operate a
lot of hours (E.g.) Garbage trucks, delivery trucks,
etc.
Current barrier – lack of refueling infrastructure
and higher initial vehicle cost.
Industry expert predicts that the NGC industry will
grow 25% per year.

Benefits of Natural Gas:

Environmental Effects of natural gas release:
Global warming.
Carbon dioxide emissions.
Other pollutants – sulphur dioxide and nitrous oxides.
Comparison of emissions from natural gas, oil and coal burning
Pollutant
(Btu)
NG Oil Coal
Carbon dioxide 117 164 208
Carbon
monoxide
0.040 0.033 0.208
Sulfur dioxide 0.001 1.122 2.591
Nitrogen oxides 0.092 0.448 0.457
Mercury 0 0.000007 0.000016
65

Introduction:
The telephone network is actually one great communication
system which encompasses many different networks.
The main system which forms the world’s telephone network
is called the Public Switched Telephone Network (PSTN).
Telephone Network Services:
The telephone network service is the system which allows any
phone in the world to connect to any other phone in the world.
It encompasses the rest of the world’s circuit-switched
telephone networks.
It includes each country’s fixed line and cellular networks as
well as their private PBX (Private branch Exchange) networks.
67
4. TELEPHONE SERVICES4. TELEPHONE SERVICES

Types of Indian Telecom market:
It has divided into two parts –
1. Fixed Service provider.
(E.g.) BSNL and MTNL are two major players.
2. Cellular Service.
a) GSM – Global System for Mobile Communication
(E.g.) Vodafone, Airtel, Idea, Aircel, etc. are major
players.
b) CDMA – Code Division Multiple Access
(E.g.) Reliance Communication and Tata Indicom are
major players.

Features of Telephone Service:
Access to local, national and international calls.
24 hour access to emergency call service number.
Operator assisted services.
Directory assistance and
Itemized billing, includes itemized local calls on request.
Types of Telephone Network:
a) Fixed Line Network:
- it is the backbone of telephone network.
- it is a great web of physically connected telephone lines
and telephone exchanges which cover the globe.
- this network originally carried analogue signals, but it
nowadays almost completely digital.

b) Cellular Networks:
- it connect mobile phones to the PSTN.
- they are owned and operated by the major mobile phone
companies.
- it comprise of a grid of masts which are connected to the
network by fixed lines.
c) PBX Network:
- it is private phone networks used by companies and
organizations.
- they connect to the fixed line network through dedicated
gateways.
- some are used only internally for security reasons. (E.g.)
military networks.

Types of Telephone Communication:
a) Point – to – Point Communication:
- telecommunication over telephone lines.
b) Broadcast Communication:
- telecommunication through radio broadcasts.
c) Multiplex System:
- telecommunication in which multiple transmitters and
multiple receivers.
Telephone internal Working Process:
- the analog system was the first telephone system
established worldwide.
- these systems will become redundant as the world switches
to digital telephony.

The components of a telephone system includes –
1. Microphone & Receiver:
a) Microphone - Converts the vibrations in the air into an
electrical signal.
b) Receiver - Converts the received electrical signal into sound
waves (the reverse action of a microphone) e.g.: loudspeaker.
2. Transmission system:
- Conveys the information representing the audio signal from
the microphone to the receiver.
3. Switching and Signaling system:
a) Switching – the first telephone switch digitizes a voice call
(8000 8-bit samples per second).
- switch bundles multiple calls. Each call receives one 8-bit slot
every 125 ms.

b) Signaling System:
“Signaling refers to the control functions performed to
setup a phone call.”
– signaling between users and the local exchange in the
central office is quite simple.

Supply of Telephone Services:
74

Indian Telecommunication Industry: (Government Role & Policy)
a) Segment – wise growth:
wireless segment is the preferred mode of telephone service by the
consumers nowadays.
the rising share of mobile phone connections to total connections.
(E.g.) India, the second largest mobile market in the BRIC nations,
with 560 million mobile users.
b) Investment: (FDI Policy)
•FDI inflows into Indian telecommunication sector amounted to US $
3.84 billion (i.e.) 6.81% of total FDI.
•Surge in mobile services market is likely to see huge amount of
investment implying a mobile in hands of every person in country.
•Huge investments are being made into this industries by public and
private sector enterprises.
75

c) Government Initiatives:
•Government has taken many proactive initiatives
which has provided a framework for rapid growth of
telecom industry.
•Opening industry for private sector participation.
•100% FDI is permitted in telecom equipment
manufacturing.
•FDI in telecom services has been raised to 74%.
•Introduction of a Unified access licensing for
telecom services.
•Allowing services providers to share active
infrastructure.

Problems faced in Telephone Service Industry:
•Slow reform process.
•Low penetration.
•Service providers bears huge initial cost and it is
difficult in achieving break – even.
•Lack of infrastructure in semi – rural and rural
areas.
•Huge initial investments.
•Limited spectrum availability and interconnection
charges between private and state operators.

Top Telephone (Telecommunication / Mobile)
services in India:
Operator Ownership
BSNL State Owned
Airtel Private
Vodafone – Idea Private
Aircel Private
Jio Private
Reliance Communications Private
Telenor India Private
Tata Docomo Private
MTS Private
MTNL State owned 78

Introduction:
Public Distribution Service (PDS) is an Indian Food
Security System.
It visualizes the system of management of food economy and
distribution of food grains at affordable prices.
It is established by the Government of India under Ministry
of Consumer Affairs, Food and Public Distribution and
managed jointly with State governments in India.
It distributes subsidized food and non – food items to India’s
poor.
Major commodities distributed include staple food grains
like wheat, rice, sugar and kerosene through a network of
public distribution shops called “Ration Shops”.
79
5. PUBLIC DISTRIBUTION SERVICES5. PUBLIC DISTRIBUTION SERVICES

 India’s Public Distribution System is built around a network of
4,62,000 ‘Fair Price Shops’, referred as ‘Ration Shops’,, one of
the biggest systems in the world.
 India’s Planning Commission estimates that 160 million
families purchase commodities at ration shops every year.
 Food corporation of India, a Government – owned corporation,
procures and maintains the Public Distribution System.
 It is to ensure food security for the country through timely and
efficient procurement and distribution of food grains.
Objectives of PDS:
 Providing food grains and other essential items to vulnerable
sections of security at reasonable prices.
 To put indirect check on open market prices of various items.
 To attempt socialization in the matter of distribution of essential
commodities.

Importance of PDS:
The main purpose of (PDS)in India was to act as a price
support programme for the consumer during the periods of
food shortage of the 1960s.
In terms of both coverage and public expenditure, it is
considered to be the most important food security network.
Major commodities distributed to consumers include staple
food grains such as wheat, rice, sugar.
These Commodities are supplied through a network of Fair
Price Shops (FPS) established in several states across the
country.
Food Corporation of India, a Public Sector Undertaking,
distributes food grains to FPS throughout the country.

 Since the mid-1980s, the coverage of the PDS was extended
to rural areas in some states.
 The PDS in India was the largest distribution network of its
kind in the world.
 It acted as an instrument of price stabilization and became a
countervailing force against private traders who were
interested to exploit the situation of scarcity to acquire more
and more profits.
People involved in PDS:
 The certain range of agencies are involved in its operation –
a) Agencies of both central and state governments.
b) Private sector traders.
c) Representatives of civil society.
They are appointed by elected officials under PDS regulations

How PDS Works?
State level ministries of Food and Civil Supplies
regulate networks of ration shops within their
jurisdictions and responsible for allocating license to
private traders to operate the shops.
State Governments also issue ‘Ration Cards’ to
their residents and determine quantities to which
consumers are entitled.
These vary from one commodity to the other one.
The prices are determined by State governments.

Operations of PDS:
Both Central and State Governments shared the responsibility
of regulating the PDS.
Under PDS Scheme, each family below the poverty line is
eligible for 35kg of rice or wheat every month, while a household
above the poverty line is entitled to 15kg of food grain on a
monthly basis.
Central Government is responsible for Procurement, Storage,
Transportation and Bulk Allocation of food grains.
State Government hold the responsibility for distributing the
same to the consumers through Fair Price Shops.
State Govt. also responsible for operational responsibilities like –
i) allocation and identification of families below poverty line, ii)
issue of ration cards and iii) monitoring and supervision of
functioning of Fair Price Shops.

Logistical Management of PDS:

1. Procurement:
It is done by the central government.
They procure the food materials from the Food
Corporation of India and the State
Agencies at Minimum Prices which
include wheat, rice, kerosene and
sugar.
Other essential commodities like
iodized salt, Palm oil, candles,
Ghee and cloth etc. have also been purchased.

2. Storage:
 Inadequate storage could lead to wastage of food.
 Proper Storage becomes an essential factor in Logistics
Management.
 Food Corporation of India does the job of storing the
grains.

Steps taken to monitor the warehouse are:
a) Food grains are to be stored by adopting proper
scientific code of storage practices.
b) Adequate materials are to be used to prevent
entering of moisture from floor to food grains.
c) Spraying of insecticides.
d) Effective rat control measures taken in godowns.
e) Regular periodic inspections of stocks.
f) Principle of “First in First Out” (FIFO) is to be
followed to avoid longer storage of food grains in
godowns.

3. Transportation:
The most common means of Transportation is:
- Roadways and Railways.
• Choice of Transport depends on volume of food grain.
a) Roadways:
- Economical over short distances.
b) Railways:
- High Speed.
- Suitable over Long distances.
- Large carrying capacity.
- Protection.
- Bulky goods.

4. Bulk Allocation:
Bulk Allocation is met to all the locations where the
demand is projected and divided as per the projection.
It plays a very vital role in placement of the products.
It gives a huge saving to the corporation.
Bulk in excess is kept as an emergency reserve in case of
uncertainty to avoid last moment crisis.

5. Distribution:
Distribution is done by the State Governments.
The food grains once received are monitored and
inspected properly and further distributed to
Shopkeepers of the Ration shops.

6. Fair Price Shops (Ration Shops):
Fair Price Shops (FPS) are called as Ration Shops in
layman terms.
Consumer gets a Ration Card
on basis of which he is given
food grains.
State Government has given
license to Ration Shops to sell
food grains at comparatively
lower price.

7. Consumers:
Consumers are people who buy food grains from FPS at
Minimum Market Price.
They are availed to purchase food grains only if they own a
ration card.
Recently Aadhaar (Unique National Identity Card) can also
be used in PDS to simplify the processes.
Most frequent consumers belong to category like Marginal
farmers, Pottery, Craftsmen, etc.

Issues in PDS:
Poor transport System.
Lack of transparency and accountability.
Bogus ration cards.
Multiplicity of schemes.
Incorrect identification of different category of families.
Inadequate food grains at Fair Price Shop.
(E.g.) Some of the scams PDS –
Meghalaya PDS Scam (Feb, 2012) – 367 sacks of rice and
35 sacks of sugar black marketed.
Maharashtra PDS scam (Dec, 2011) – 4.2 million bogus
cards found.
Karnataka PDS scam (July, 2011) – worth 1738 crores.

Introduction:
Public Transport is a shared passenger transport service
which is available for use by general public.
Public transport modes includes buses, trains, rapid transit
(metro / subways, etc).
Public transport between cities is dominated by airlines,
coaches and intercity rail.
Most Public transport runs to a schedule timetable with the
most frequent services.
Urban public transport may be provided by one or more
private transport operators or by a transit authority.
It is usually funded by government subsidies and fares
charged to each passenger. 95
6. PUBLIC TRANSPORTATION6. PUBLIC TRANSPORTATION
SERVICESSERVICES

Types of Public Transport:
1. Bus:
- Bus services use buses on
conventional roads to carrying
numerous passengers on shorter journeys.
- It operate with low capacity (i.e.) compared with trams or
trains), with relatively inexpensive bus stops to serve
passengers.
- It is commonly used in smaller cities and towns.
- Trolleybuses are electric buses that employ overhead wires
to get power for traction.
Benefits:
1. Cheaper than other means of transport.
2. Good way to travel into city. 96

2. Train:
- Passenger rail transport is conveyance of passengers by
means of wheeled vehicles specially designed to run on
railways.
- It allows high capacity on short or long distance, but
required track, signaling, stations to be built & maintained.
Benefits:
1. With train you can feel comfortable.
2. It is also a cheap way of transport.
3. You don’t get remain in traffic jam.

3. Airlines:
- It provides scheduled service with aircraft between airports.
- Air travel has high speed, incurs large waiting times prior
and after travel.
- It is feasible over longer distances or areas where lack of
modes of transport impossible.
- It waits for passengers and takes off when aircraft is full of
luggage.
Benefits:
1. You can arrive destination faster then
any other means of transport.
2. With airline you can have a comfortable trip.

99
4. Metro:
- Rapid transit system is a public transport system in urban
area with high capacity, high frequency, fast and segregated
from other traffic.
- it is located either in underground tunnels (subway) or
elevated above street level.
- Modern services provided on designated lines between
stations using electric multiple units on rail tracks, magnetic
levitation or monorail.
- It is unchallenged in its ability to transport large amounts
of people quickly over short distances with little use of land.

5. Ferry:
- Ferry is a boat or ship, used to carry passengers and
sometimes their vehicles across a body of water.
- A foot – passenger ferry with many stops is called as water
bus.
- It form a part of public transport systems of many waterside
cities and islands.
- Ship connections of much larger distances (i.e.) long
distance in water bodies like Mediterranean Sea)

Benefits of Public Transport:
1)Public Transport is more cheaper then Private
Transport.
2)It is a good way to travel in long trips and in short
trips.
3)You don’t get remain in traffic jam.
4)With Public Transport you can have a comfortable
trip.
5) You don’t cause air pollution.
6) Public Transport is more safer then Private
Transport.

Effective Public Transport Planning:
1. Accessibility options.
2. Station design.
3. Vehicle and Infrastructure design.
4. Public Transport priority.
5. Model Integration of vehicles.
6. Professionalism.
7. Network Coverage.
8. Frequency and Reliability.
9. Fare integration.

Public Sector:
- owned, managed and controlled by the Govt.
- funded by the Govt.
- Welfare oriented.
It includes services like –
- Public roads.
- Public transit.
- Primary education.
- health care, etc.
103
ROLE OF PUBLIC UTILITY SERVICESROLE OF PUBLIC UTILITY SERVICES
IN INDIAN ECONOMYIN INDIAN ECONOMY

Objectives of Public Sector:
1. To increase capital formation.
2. To check the monopoly.
3. To achieve economic equality.
4. To perform welfare activities.
5. To promote regional equality.
6. To increase employment.
7. To promote self reliance.
8. To increase income of the government.
9. To set up heavy industries.

Role of Public Sector:
 Contribution to Capital Formation – increase the capital
level in a country.
 Development of infrastructure – refers to power, transport,
communication, etc.
 Contribution to Import substitution – it is the development
process in our economy.
 Role of Export promotion – earnings substantial foreign
exchange.
 Share in national income.
 Resources of economic development.
 Promotes employment generation.
 Growth of Ancillary industries.
 Balanced Regional development. 105Unit 2 – Public Utility Services

Growth of Public sectors of Indian Economy:
a) Primary Sector:
- economic activity depends mainly on exploitation
of natural resources.
b) Secondary Sector:
- it involves manufacturing activities, where
physical goods are produced come under secondary
sector.
c) Tertiary Sector:
- it involves intangible goods like services –
financial services, consultancy, IT, etc.

Impact of Service sectors on Indian Economy:
Economic Growth.
GDP / National Income.
Economic Stabilization.
Employment Generation.
Export Promotion / Import Substitution.
Earning more Foreign Exchange.
Price Control / Stabilization.
Enhancing Productivity.
Help to Develop other Sectors.
Quality of Economic Services.
Increasing Tax Resources.

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