institutional mechanism for electricity distribution in rural areas: opportunities from new...
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Institutional Mechanism for Electricity Distribution in Rural Areas: Opportunities from New Electricity Act. Haribandhu Panda, Ph.D. Professor INSTITUTE OF RURAL MANAGEMENT ANAND – 388 001. Plan of Presentation. Present Scene of Rural Electricity System General Orissa experience - PowerPoint PPT PresentationTRANSCRIPT
Institutional Mechanism for Electricity Distribution in Rural Areas:
Opportunities from New Electricity Act
Haribandhu Panda, Ph.D.Professor
INSTITUTE OF RURAL MANAGEMENT ANAND – 388 001
Plan of Presentation Present Scene of Rural Electricity
System General Orissa experience Bihar experience
Existing Approach Vs New Approach
What can be Done?
Present Scene of Rural Electricity System
Consumers’ Perception About Distribution Company
Harassing attitude of employees Lack of accountability Unequal treatment Unfair blame Tariff higher than the quality of power deserves
Present Scene of Rural Electricity System
Distribution Company’s Perception AboutServices Offered
Subsidized Power to Agriculture and Domestic segment is the cause of
Poor financial health Irrational increase in demand for electricity Poor maintenance of distribution infrastructure Lower rate of capacity addition
Long distance distribution lines leads to Higher distribution loss Low reliability of supply
Low energy use density
Present Scene of Rural Electricity System
Availability of Electricity 43.5% of Rural Households (60,180,685)
(Census of India 2001) 54% of villages (3,24,319)
Quality of Electricity Service Frequent and long interruptions (14 hour brown out) Large voltage fluctuations (+/- 40%) Service delivered not when needed but when
available
Present Scene of Rural Electricity System
Investment required for full coverage of villages: Rs 1,07,823 Crore(Planning Commission, 2000/01 prices)
Average annual investment in last decade: Rs 8,800 crore
Need a paradigm shift in approach
Reform in Electricity Sector: Some Experience from Orissa
• Per capita consumption of electricity • 1995/96: 370 kWh • 1999/00: 334 kWh
• Average tariff increase (1991-2000): at a cumulative rate of 15.5% annually (without any significant improvement in customer service)
• The transmission and distribution loss• 1995/96: 46.94%• 2001/02: 46.63% • Loss in the LT segment at 68%
Reform in Electricity Sector: Some Experience from Orissa
• Collection as a percentage of billing• 1995/96: 90.5%• 1999/00: 74.6%
• Rural electrification: Distribution companies often missing target and divert resources
• Electricity supply to 720 LI points and 461 villages damaged during cyclone in October 1999 were not restored even after eight months
Reform in Electricity Sector: Some Experience from Orissa
• The proportional consumption of electricity in agricultural sector has come down
• Declining trend in number of pump sets energised.
• Switching-over to diesel engine driven pump-sets
• Mostly Defective or unmet red electricity supply in LI system
Reform in Electricity Sector: Some Experience from Orissa
Load factor charging (8% on the contract demand from June to October and 15% on the contract demand from November to May)
Subsidy from REC (Rs 15,000/LI point) is difficult to come through and advance payment (for material and labour) is increased from 125% to 154%.
• The investment in new meters and distribution network upgradation is not being done.
Reform in Electricity Sector: Some Experience from Orissa
• Micro-privatisation: Village Bidyut Sanghas (Village level electricity committee of 5-6 members)
• Activities: meter reading, bill distribution, regularisation of illegal connections, recommendation for new connections, advising for disconnections and credit control, liaising with authorities, complaint redressal
• Service charge: Rs 0.85 and Rs 0.65 for meter reading and bill distribution respectively
• VBS helped in increasing revenue, empowering villagers in certain areas
Private Power Market in Bihar
• Main distribution lines by the private power supplier and arterial lines by the consumer
• Electric poles of SEBs used for laying wires
• FR Tariff (Rs/100 watt/month or Rs/ampere/month)
• Voltmeter and ampere meter at distribution point and safety fuse at the consumer point
Private Power Market in Bihar
• Penalty of one day no power for burnt fuse and cost of circuit breaker
• Low voltage supply• 40-62% return on capital invested
Private Power Market in Bihar: Cost of power to consumer
Type Terms of contract Actual hours of supply/month
Rate to consumer (Rs/kWh)
Small regular buyer
5 hr/day, Rs 6/day 150 12
Small buyer for one shift
Whenever SEB supply out during 12 hour, Rs 150/month
186 8.1
Bulk buyers: both shift
Whenever SEB supply out during 12 hour, Rs 250/month
329 7.6
Dedicated renters
Whenever SEB supply out during working hours, Rs 100/month
110 9.1
Conclusion from Present Scenario
Through Traditional Approach
Full coverage is difficult to achieve in near future Expensive
Reform in the present form did not lead to improvement in rural electricity scene
Conclusion from Present Scenario
Consumers are ready to pay a fair price for the desired quality of electricity
Informal systems often cheaphave the flexibility to meet expectations of rural consumersFace many problems to be effective
There is a need for paradigm shift
Existing approach vs. New approach Existing approach Supply driven Centralized Government sole
provider of service
Full coverage expensive and time consuming
Demand shrinking Increase dependency
New approach Integrated Decentralized Government is central
star in the constellation of service providers
Full coverage cheaper and speedier to achieve
Demand creating Empowering
The Electricity Act 2003: Harbinger of New Approach
Part II: National Electricity Policy and PlanSection 4: National Policy on Stand Alone Systems for
Rural Areas and Non-conventional Energy Systems
The Central Government shall, after consultation with the State Governments, prepare and notify a national policy, permitting stand alone systems (including those based on renewable sources of energy and other non-conventional sources of energy) for rural areas.
The Electricity Act 2003: Harbinger of New Approach
Part II: National Electricity Policy and PlanSection 5: National Policy on Electrification and Local
Distribution in Rural Areas
The Central Government shall also formulate a national policy, in consultation with the State Governments and the State Commissions, for rural electrification and for bulk purchase of power and management of local distribution in rural areas through Panchayat Institutions, users’ associations, cooperative societies, non-governmental organizations or franchisees.
The Electricity Act 2003: Harbinger of New Approach
Part II: National Electricity Policy and Plan
Section 6: Obligations to Supply Electricity to Rural Areas
The Appropriate Government shall endeavour to supply electricity to all areas including villages and hamlets.
What can be done?
Develop local level institutions to:
Meet electricity needs by local generation and grid support
Meet cooking energy needs by a combination of biogas, producer gas and LPG
Reduce domestic and irrigation electricity demand and cooking energy demand through demand side management measures
What can be done? (Contd.)
Develop local level institutions to:
Own financial stake and run on commercial line
Become self reliant on primary energy sources: crop residue, energy plantation, etc.
Empower local community by Economic (through job) and institutional (through management) means
What can be done? (Contd.)
Possible Institutions: Users’ cooperative companies Panchayat
NGO Franchisees Private companies
What can be done? (Summary)
Promote Total Energy Management Centers at Local Level with scope for micro-generation and micro-distribution. Only electricity distribution will not be effective.
Identify minimum size of network that can be independently managed (bring down competition to circle level)
Reduce entry barrier for decentralized electricity system
Allow flexible tariff system by linking with service quality
Innovative regulatory measures near the service provider
Thought from Prof. A. K. N. Reddy
“If sustainable development is the desire, then the energy system chosen for the country in general and rural area in particular must advance rural economic growth, that is, they must be economically efficient, need oriented and equitable, self-reliant and empowering, and environmentally sound”.