All India Power Engineers Federation (AIPEF) expresses its concern regarding the creation of a Joint venture Company of NTPC and Power Grid Corporation Of India Ltd (PGCIL) for the purpose of entering into the distribution business. It is worth while to mention that the integrated State Electricity Boards (SEBs) were disintegrated and distribution and transmission were separated from generation in the name of so called reforms.  If a Generating company and a transmission company are to conduct distribution business this would amount to creation of an integrated utility. This means that Government of India has finally recognized the critical need to reintegrate the utilities and demands reintegration of SEBs. However, such reintegration will yield greater benefits to the electricity consumers, if it is implemented at the level of the State utilities which face the consumers directly and are accountable to them.

2. Decision making relating to sub-transmission voltage level of distribution necessarily involves local decision making. Decision relating to economic development in local areas is taken by the State Governments and municipalities, and based on that distribution networks and load sanctions are given. AIPEF fails to understand why this function is being usurped by the Govt. of India.

3. Privatization of distribution in Delhi has resulted in creation of very high levels of regulatory assets which have at some date to be translated into increase in consumer tariffs. Huge regulatory assets have also been created in Mumbai. The first case of privatization of distribution in Odisha has been a singular failure not once but twice.

4. The record of Franchisees has also not been very positive. Some Franchisee like Aurangabad,Gaya,Muzaffarpur,Bhagalpur,Gwalior,Sagar,Ujjain,Jalgaon have miserably failed and UDF agreement has been cancelled. Recently SNDL (Formerly Spanco) UDF in Nagpur has written letter to Chairman MSEDCL to step in and take over Distribution of Nagpur. SNDL has shown it's inability to run the UDF Nagpur and has finally surrendered. In UP at Agra regularly franchisees default in making payments to the Power Corporation. An independent evaluation of the performance of the privatised utilities accross the country, their impact on the consumers in terms of the cost burden and customer service and the financial burden caused by them to the banks and other financial institutions will show that the benefits accruing from their counterparts in the State public sector are far more than what they could deliver.

5. On the other had state Discoms have improved their collection efficiency and have delivered better utility services in Gujarat, AP, Telangana State, Karnataka,Maharashtra,Punjab,WB and in many other states, compared to private entities. On the issue of AT&C losses the real culprit is lack of investment in distribution. All urban areas are developing both vertically and horizontally. The pattern of development is very energy intensive. In the absence of additional investments, the same conductors and transformers are carrying additional loads resulting is increased losses and breakdowns. In the case of Discoms, this is of greater importance, as they fulfill their social commitment by extending electricity to remote areas and to areas where the load density is necessarily low.

6. APDRP, now IPDS fund was designed to meet this investment crunch. Instead of strengthening APDRP the Govt. of India wants to create instruments to enable central utilities to enter the distribution business.  The immediate need is to create a non banking financial institution (NBFI) for urban areas on the same lines as the Rural Electrification Corporation.

7. AIPEF appeals to the Govt. of India to withdraw the proposal to set up a Central Undertaking for entering into distribution in larger interest of State and Power Sector.

Thanking You.

Sincerely Yours

Shailendra Dubey

Chairman

CC.

Chief Minister - All States and Union Territories with the request to  resist attempts to usurp the functions assigned to States by the Constitution of India.

Shailendra Dubey

Chairman

 CC.

Chief Minister - All States and Union Territories with the request to  resist attempts to usurp the functions assigned to States by the Constitution of India.

Shailendra Dubey

Chairman