TERI-GSEP PPP in Electricity Distribution – Case Studies of Delhi and Odisha
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Project Overview

Public-Private Partnerships (PPP) bring in two very important elements for sustainability of the sector — finance and new set of management practices. It is important to study some of the successful PPP in the distribution sector to understand the factors affecting the success of the PPP in the sector. To capture these aspects the two cases of — the implementation of PPP in Delhi (Tata Power Delhi Distribution Ltd) and in Odisha (Feedback Energy Distribution Company Ltd) have been studied.

The study brings out the factors contributing to the success as well as the challenges faced during the implementation of PPP in electricity distribution and importance of encouraging PPP in the distribution segment. Through these two case studies of Tata Power Delhi Distribution Ltd (TPDDL) and that of Feedback Energy Distribution Company Ltd (FEDCO), ïnvolve performance on key performance parameters related to technical and financial aspects including distribution losses, O&M expenses, collection efficiency, consumer metering, distribution transformer failure rate, protection of consumer interest, etc. have been carried out. This study will serve as a guideline for future implementation of PPP model in the Power Sector.

Lessons Learned

The achievement of the two PPP case studies provides some key takeaways which may serve as a guideline for future implementation of PPP in power distribution. The major key takeaways learned from the study has been summarized below:

  • ƒƒHigh loss making areas makes better business sense: Areas which have high losses ( both AT’C and financial losses) make better sense as the private partner can use his managerial and technical skill to reduce AT’C and gain from the reduction in financial losses. Areas which do not have high losses do not provide this opportunity as there is very limited possibility of loss reduction and improvement in financials. ƒƒ
  • Handholding by the public partner: The transition support to the PPP model is a must for the success of the model. As has been the case of Delhi, the support extended by the public partner to the PPP institution to sail through difficult initial phase of the business when focus of TPDDL was on the development of system and process. The transition support extended by public partner has been appreciated by various other studies as a major cause of success of PPP model. ƒƒ
  • Upfront investment in system upgradation: Private investors with deep pockets who have the willingness to spend first on improving distribution system so as to provide secure and reliable supply are needed. It has been observed that customers are willing to pay once secure, reliable, and good quality power is assured. ƒƒ
  • Consumer centric approach is essential for better results: The efforts of private partner towards better service delivery to consumer, for example, time bound resolution of complaints; an efficient consumer centre etc. is appreciated by the consumers. Developing business plan with focus on the consumer centric approach is expected to help in development of satisfaction and loyalty amongst the consumers. ƒƒ
  • Involving the local community could help in curtailing losses: As has been the experience of Odisha the involvement of local community such as SHGs is expected to help in curtailment of losses.
  • Social and political acceptance of franchisee model: Franchisee is considered to be partner of utility and carries activities on behalf of the utility. There has been no resistance from the staff of the utility or the consumer at large. This indicates that the franchisee model may be more socially and politically accepted. ƒƒ
  • Innovative interventions for customer outreach: TPDDL undertook various innovative interventions, such as use of CSR funds to enrich the life of consumers in low income areas, concept of red bills, development of technologies to reduce theft, innovative use of technology, etc., paid reach dividend to the utility in curtailing its theft. The PPP institutions may also rely on the environment-based innovative approach to reach out to the consumers which would increase the loyalty of the consumers towards the organization. ƒƒ
  • Incentivizing consumers: The approach of the PPP model to incentivize consumers so as to increase their loyalty also pays handsomely. Interventions such as decreasing the upfront cost of metering of low income group consumers, provision of life insurance to the regular paying consumers, approach to encourage settlement of theft cases even with a lesser amount than that they may actually owe so as to encourage consumers not to opt for the lengthy legal process, etc. may be important for the PPP utility to achieve it target. ƒƒ
  • Motivating employees: No organization can flourish without the presence of motivated employees. Since takeover TPDDL focused on integration of the employees of erstwhile DVB in a different work culture. With its effort to enrich life of employees, the utility has been able to develop a strong team of dedicated employees.
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