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Kenya and Jamaica looking at Delhi's privatisation model

Livemint:  August, 2015

New Delhi: In an attempt to introduce electricity distribution reforms in their countries, representatives from Kenyan and Jamaican governments are looking at the experience of the Indian electricity sector, particularly in Delhi.

A team comprising representatives from Kenya Energy Regulatory Commission, Kenya Power and Lighting Company, Jamaica Public Service Company Ltd and Jamaica Social Investment Fund visited the Delhi Electricity Regulatory Commission (DERC) and distribution firms such as Tata Power Delhi Distribution Ltd (TPDPL) earlier this month.

Three of Delhi power distribution companies, or discoms, were privatized in July 2002: BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Ltd (BYPL) and TPDPL. The distribution firms are joint ventures with Delhi Power Co. Ltd, which owns a 49% stake in each of them. The other discoms in Delhi are Military Engineering Services (for Delhi Cantonment) and the New Delhi Municipal Corporation. These distribution firms have a consumer base of around 4.231 million customers, with Delhi’s power demand in the region of around 5,000 megawatts (MW).

“A lot of countries are looking at us to understand how to introduce electricity distribution reforms. This includes the regulatory architecture. Even a team from Nigeria had come some time back,” said a senior DERC official, requesting anonymity.

A TPDPL executive, who also didn’t wish to be identified, confirmed the development.

Power sector reforms in Delhi have been a mixed bag, with allegations of discoms inflating their losses. This comes in the backdrop of the proposed increase in Delhi’s electricity tariffs, with the issue taking political overtones. The Aam Aadmi Party came to power in Delhi in February on the promise of lowering households’ electricity bills.

Queries emailed to Kenya Energy Regulatory Commission, Kenya Power and Lighting Company, Jamaica Public Service Company Ltd and Jamaica Social Investment Fund weren’t immediately answered.

In a column for Mint last year, Shakti Sinha, Delhi’s former power secretary, wrote, “Some of the key gains from the privatization of distribution in the city: aggregate technical and commercial losses have come down from around 55% to 15% at present. Load shedding has reduced from 5% to around 0.3%, or from 891 million units in 2000-01 to 43 million in 2012-13.”

“Privatization has also had a hugely positive impact on Delhi’s public finances, allowing the government to go on a building splurge of elevated roads, flyovers, hospitals, schools, colleges and universities. Earlier, the sector was a strain on the government budget, with outflows of Rs.860 crore in 1998-99, Rs.1,136 crore in 1999-2000 and Rs.1,337 crore in 2000-01,” Sinha wrote.

India has been offering its expertise for capacity building to African countries and elsewhere.

State-owned Power Grid Corp. of India Ltd (PGCIL) has been scouting for opportunities in Nigeria and Kenya for setting up transmission projects through the public-private partnership (PPP) route. As part of its consultancy assignments, PGCIL is already involved in institutional development in Kenya by training the transmission system engineers of Kenya Electricity Transmission Co. Ltd (Ketraco).

Also, Ethiopia may renew a key contract awarded to an Indian consortium led by PGCIL for managing its power sector. Some of the efficiencies brought in by the Indian consortium include improvement in transmission system, fewer blackouts, better generation and wider consumer base. Ethiopia has had one of the worst records in terms of access to electricity.

For decades, India enjoyed strong ties with Africa, stemming from a shared colonial past and India’s support for independence movements in the continent. But in more recent years, Chinese economic diplomacy and aid put India-African ties in the shade. India found that its economic interests in Africa were dwarfed by China’s.