Electricity in Delhi City.

The power regulator asks private electric distribution companies to reduce tariff since they made huge profits.  The Chief Minister of Delhi steps in and says people of Delhi are rich enough to pay and ticks off the regulator. Unbelievable, but true!

 

The repeated controversies involving power distribution companies in Delhi after privatization of the power distribution utility is a telling example of the growing role of corporate clout in public administration and governance. That government is progressively handing over its domain to interested parties is clear; that private companies now lay down the law, or design policy to suit them selves is the new indicator of a dangerously worsening situation.

As if it was not enough that ever since the privatization of power distribution in Delhi in 2003 there have been scandalous allegations about the private distribution companies that were hand picked* for the job, but this newest episode leaves us all dumbstruck at the sheer malevolence of it.

To understand it better, you may need to go back to the reasons why power distribution was privatised. My arguments have been that privatization of power distribution was in effect the hiving off of the least problematic part of the problem – since generation remains static, any attempts to stream line distribution would essentially be about skimming the cream off the milk. Remember that T&D – transmission and distribution – sounds terribly complex, but with most of the infrastructure already in place in Delhi, for the private parties that were finally brought in, it was all about the billing. That is proved to be. But the reasons the government gave are even more charming.

At an acrimonious meeting organized by the Centre for Civil Society in 2005 where I was invited to take up cudgels on behalf of the residents among representatives of distribution companies, I argued that privatization was unnecessary in public utilities and that the government is merely abdicating its responsibility.  It was here that Ajay Maken, then a minister in the Delhi Government, let it out that power distribution was privatized in Delhi because the government was unable to stop power pilferage – basically non payment of power dues – which the Government claimed was close to half of the power distributed. Strange logic! A government with access to the full force of the  law and order machinery of the state, the courts and judicial processes and a department devoted to vigilance could not stop power theft, but a private corporate would be able to! What did the private player have that the Government did not?

 I suspect it was will.

There were just too many votes at stake if the politicians had stepped in and demanded that the slums and illegal industrial areas they had helped settle started paying for power. Then again, with a corporate intermediary in place, happily, there would be room for some financial goodies too. That is the simple way to manage such problems if you come from the Congress party.

 

Conspiring with the conspirators: A government for the people – or against !  

 

But this time around, the government of Delhi has overturned all norms of good governance by actively conspiring with private power brokers against the population of the state. It has exhibited mala fide intention in obstructing the relief in tariff that was long overdue and which was finally coming the way of consumers thanks to some activism on part of the Chairman of the Delhi Electricity regulatory Commission [DERC]. There is no example anywhere in the world of such a case where the state conspires against its own people in favour of private companies whose record by any standards is dubious.

 But what’s new.

Did you know for instance, that the power companies reclaim the money they spend fighting cases against consumers – from the consumers themselves! – by factoring such expenses in their accounts to the DERC which  then fixes a tariff that neutralizes this cost.  

The signs were there for all to see but clearly nobody was watching. Ever since the diabolical privatization of the state utility Delhi Vidyut Board, the private power distribution companies [DISCOMS] have replaced it with a new draconian methodology that gives consumers the choice between a rock and a hard place, and no recourse to justice.

Did you know that these power distribution companies have the Central Industrial Security Force [CISF] at their disposal to raid premises without notice? Their employees can enter your house at any time and you cannot stop them – by law. Not even if the sub-contracted meter readers are mostly lumpen elements of the area or so menacing that women call up their husbands at work when they knock on a house. If you have a dispute, you cannot take your case to a normal court – they have established special courts for power related disputes. If they get you in a theft case – even fictitious, actually mostly fictitious – you have no relief possible but to pay what they demand or go to jail. If you feel your meter is fast, the onus is on you to prove that it is, using their technicians, their equipment, in front of their authorized personnel.

It has come to light that most of the theft cases are engineered by their own sub-contracted electricians – it stands to reason, for who else will have the capacity to break open seals and then re-fix them, apart from an intimate knowledge of how to tamper the meters. In 2007-2008, two incidents led us to believe this was more true than false. A person called Dharmender Kumar** used his cell phone camera to record three days of footage showing how the BSES technicians would approach him to re-calibrate his meter suggesting that these meters were pre-fixed to be fast and they could slow it down. He was featured by the TV Channel  Aaj Tak in a programme and I was there too, so I know. I also have the taped videos. Later with the help of a technocrat friend and some of their own meter-fixers [we had to pay them and maintain anonymity], I organised a demonstration for a few journalists to show how these so-called tamper-proof meters could be slowed down using a crude China-made device. A logical corollary of this is that if they could be calibrated to slow down, they could also be calibrated to speed up.

But, finally an even bigger conspiracy came to light – these meters are calibrated to only record data that helps the power companies, not the consumer. For instance, they will record every minute passage of power, even if the power is circulating in a faulty circuit to earth. But the meters will not measure the voltage they supply electricity at; or, how many times the power goes off during a day – which could implicate them. Or if there is a leak in your earth wiring  – technically all such electricity as per law  is not consumed by you and is not your responsibility to pay for. [This partly explains why everyone was shocked when they got new meters installed and their bills shot by huge margins].

So how do we know that these meters are not actually factory fitted to run faster than the old mechanical meters – and this has exercised almost everyone I know, with good reason. If we can’t trust the company we are dealing with for business ethics, how do we know how far they can go.

Worse, the DERC, [who we are now supporting because for the first time it has openly proposed a tariff reduction] has been lackadaisical about this from day one. They haven’t even approved the meter specifications and now we have what is fait accompli – with over 20 lakh meters already installed, the DERC has to accept whatever the specification of the meter these private companies provided you with. No wonder everyone has had inflated bills since then!

 

Government monopoly to private monopoly –  in the name of reform!

 

Nobody would have imagined that the knights in shining armour who were brought in with such flair seven years back as a corollary to the Accelerated Power Development and Reform Programme (APDRP) of 2001 could have backfired so quickly. And nobody could have caught that the worst case scenarios would be played out in the heart of the country’s capital.

Supporters of privatization must admit that this is the worst ever example of privatization and it is for that reason that it continues to raise a stink almost every year since inception. For those who see privatization as the one-pill-for-all-problems, it is time to sit back and take a fresh look at what makes privatization work. It is a fundamental fact of the free market that what makes the market work is an internal correction mechanism called the factor of competition. The Delhi government has cleverly sold us all the chimera of privatization without its attendant support systems of competition. Result: the entire saga of privatisation of distribution of electricity in Delhi is a story of the transition from a government monopoly to a private monopoly. The difference is that while what we had in the time of the DVB could be called inefficient corruption, what we have now is a regime which is efficiently corrupt.

No wonder it feels like it is back to the DVB days with the exception that there is a call centre voice available to hear you out every time you call the grievance cell – with the guarantee that no grievance will be actually tackled, only recorded as addressed!

We have argued repeatedly that the correlation between reduction in power theft to increased profits is being constantly papered over by numerical jugglery, smart book keeping and obfuscation of facts. We proved that the Power Secretary admitted that tariff was fixed in a manner to make an honest consumer pay twice over to make up for the dishonest, non-payer of bills [Tthis advocacy line helped us stall power tariff hikes for two years in a row until 2008]. We have shown without doubt that the DISCOMS have flouted every rule in the books to have their own way repeatedly, and that the Govt. of Delhi is in cahoots with them.

The Delhi Government’s own Public Accounts Committee declared the privatization process full of anomalies and recommended a CBI enquiry. But guess what the Shiela Dixit government did to thwart it – they did not even table the report in the assembly even though the member of the legislature who authored it was their own party member.

So why does it still continue in the same manner? Two words: vested interest. One more word: money.

 

Guaranteed profits. Zero accountability: Lack of transparency is the real cause of the present power tariff controversy.

 

What a strange situation the latest crisis is. This is not about opinions and estimations. It is about hard facts and figures. The DERC concluded, rightly in our view, that DISCOMS have had a great run over the last five years and were soaking in profits. The DISCOMS say, on the contrary, we are losing money. How can the same set of accounting figures be read in two diverse ways? Unless, they are not reading the same set of figures at all.

All reports point to severe inconsistencies in the DISCOMS Annual Revenue Requirement [ARR] data. A former member of a power sector finance commission has reported to me that the DISCOMS’ annual report shows profits, but the ARRs submitted to the DERC show losses. If that is true, this is a serious charge. Many questions remain unanswered. What happened to the revenue generated by sale of power at non-peak hours? How do we know that these companies do not inflate costs – everyone in business does it – why should we believe that they don’t ? How many employees do they have on the rolls? Why are most of their grounds men on contract? Who verifies how many people they have on contract?  Who verifies cost of procurement of machinery? Did DERC check what the actual costs of the meters they procure is ? Did the DERC approve all features of the meters in the first place? Is their any procedure for a physical check of their stores and the value of goods?

It would take a class tenth student of economics to pick large holes in their account books.

So, how come there is no audit by a third party? Why are the DISCOMS out of the ambit of RTI act? A recent judgment by the High Court made it clear that the quantum of government funding could not be used as a means to block RTI applicability on private bodies. Private schools which receive paltry aid from governments are not exempt. How come an entity with 49% government equity is still out of it? Why is the Government and the DERC not pushing for RTI applicability on DISCOMS? [ By the way, the DISCOMS have used their legal muscle to obtain a stay on this in court ].

The problem remains transparency. For as long as their accounts remain under wraps there is no way to prove anything. We have demanded time and again that unless there is an independent audit, private power companies will get away with murder. As we have seen, they are doing just that – with the Government as accomplice. The recent controversy involving tariff fixation by DERC and its opposition by DISCOMS is a clear example of how financial secrecy has been repeatedly used to squeeze both the state and the consumers by private power distribution companies.

 

What begins in suspicion, should end in suspension.

 

I have purposely refrained from intervening in the power mess for the last one year in spite of repeated requests from civil society members and RWA groups for the simple reason that it was important to show everyone what this government was capable of, if left unhindered. The truth is now out in the open.

The fact is that privatization was designed in a manner to provide these companies with a carte blanche – an open offer to quote what they want, when they want, at the terms they want. Notice that the Power Ministry has been kept under the CM’s office this time around. The DISCOMS just did not want a non-compliant minister at work. So we have our very own CM now as Minister of Power to ensure that these companies get what they want. Or else.

This latest crisis has only revealed what has long been suspected and repeatedly proven: that DISCOMS are operating in a cartel with the active support of Delhi government’s highest decision making levels. The clout of these companies in the corridors of the Delhi government is stupendous. Look at the brazen manner in which they flout the regulator’s diktat. Worse, the Government sides with them! Why bother having the regulator then. Let us cut this sham out and admit the real agenda at work – profit above everything else, and the people be damned.

The embarrassing intervention of Delhi’s CM in a matter that should have been solely between the power regulator and the distribution companies is merely an exhibition of the degradation the sector has seen ever since the privatization scam began. The fact is, the scam is not yet over.

………………………………………………………………………………………………………….

*No tendering took place. BSES and NDPL were apparently cajoled into taking it up. Now, when you are going to go crawling to them, they will set the terms, like they do till today.

** Dharmendra is now one of our RWA group members.

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