Delhi’s dirty secret of privatisation
by Sandhya Jain on 29 Jul 2014 3 Comments

Continuous power outages, a sharp rise in tariff by a regulator ever solicitous of the interests of companies gifted the monopoly of power distribution in the capital by a regime booted out for the same reason, and Delhi’s cup of woes is full. As the audit by the Comptroller & Auditor General (CAG) fails to take off and the issue of fast running meters festers, there are strong suspicions that software manipulation accounts for consumption hikes in homes with fixed usage in both summer and winter months.


The dirty secret of privatisation of electricity distribution in Delhi – carefully concealed even by the vociferous Aam Aadmi Party (AAP) – is that the Government of Delhi maintains 49 per cent share in each of the three discoms. The Chief Secretary, principal secretaries (power and finance) and other senior officers are directors on the board of these companies. This means that the Government of Delhi was always privy to their actions, but became complicit with them instead of protecting the public interest.


This shocking information came to light only three weeks ago when the CAG Shashi Kant Sharma wrote to Lt Governor Najeeb Jung protesting that the Delhi Government (now under his rule) was failing to facilitate audit of the discoms. It is well known that the discoms are resisting the audit demanded by Residents Welfare Associations, and upheld by the Delhi High Court.


Slated to begin in January 2014, the discoms have staved off the process by denying crucial and relevant records to the CAG. The information denied pertains to energy audit reports, internal audit findings and minutes of audit committee, and all data relating to billing prior to financial year 2011. The absence of such vital information has rendered any audit impossible; perhaps only a court-mandated raid on their premises can make it happen.


Several legitimate questions arise and demand answers. At whose behest was the decision taken to privatise distribution of power and why; on what criteria were three private firms (two owned by one group) selected and given the monopoly to distribute power in the capital and corner galloping profits; and above all, what (or who) made the Government of Delhi surrender controlling interest to these firms? The answer to these questions will surely open a can of worms; the CAG has rightly urged the Lt Governor to hold the chief secretary liable to ensure that all information is furnished quickly. Mr Sharma has bluntly hinted that the top Delhi bureaucrats (and their political masters) protected the interests of the private firms (i.e., abetted their profiteering) and callously disregarded the concerns of affected citizens.


It is pertinent that though the AAP rose to power due to vocal opposition to the spiralling electricity tariff in Delhi, and Arvind Kejriwal recommended the audit during his brief stint as Chief Minister, he did not inform the people that the Government of Delhi held stakes in the firms. Nor did he attempt to seize their records after the High Court approved the audit. Given persistent rumours about the AAP’s relationship with a certain corporate group, it will have to explain its acts of omission and commission.


It must be conceded, however, that the AAP took the trouble to study the issue and uploaded its findings on its official website in the run-up to the Delhi election. It said power distribution in the capital was privatised in 2002 on grounds that the firms would bring down distribution losses (including theft) from the then prevalent 55 per cent, which would benefit consumers through reduced tariff. But though losses fell to 15 per cent, electricity tariff nearly tripled in the past three years through various pretexts.


A cursory look shows that tariffs have multiplied six to seven times since privatisation. A pertinent comparison is whether this would have been the situation if distribution had remained with the Delhi Electric Supply Undertaking (DESU). Unlikely, so who benefits from the freeloading strata known as the private discoms?


A parallel fraud was the setting up of ‘independent’ regulator, Delhi Electricity Regulatory Commission (DERC). In 2010, then DERC chairperson Brijender Singh found that the discoms were making profits of Rs 3577 crore and decided to recommend a 23 per cent reduction in tariff. But a day before the order was due, Chief Minister Sheila Dikshit ordered him to refrain. Though the High Court rebuked her and asked DERC to pass a fresh order, by then the chairperson had changed; he raised tariffs by 22 per cent in 2011 and 32 per cent in 2012. The overall tariff increase since 2011 to the present is around 65 per cent, a period in which household incomes have shrunk drastically.


Resident Welfare Associations have long been dissatisfied with the DERC. Can PD Sudhakar explain how the profit discovered by Brijender Singh disappeared, and a 23 per cent decrease in tariff became a 22 per cent hike? In the absence of any audit of discoms’ accounts, how did he accept their demands for steady tariff increases from 2010? The DERC must be made to explain to the CAG how it supervised the discoms in terms of getting them to upgrade transformers, improve high-tension mains, and other outdated equipment since 2002.


The worst offender in the discoms saga is the electronic metre, allowed by the High Court and later the Supreme Court. The outcry against fast running meters with zero redressal has since been aggravated by a second change three years ago, making bills even higher without commensurate change in household usage. Strangely, households that switched to CFL bulbs and happily found that their electricity bills shrank to one-third the first month following the change were bewildered to note that the billing quickly jumped back to the old high. Without external intervention (read manipulation), this is scientifically impossible.


The CAG audit (when it happens) must scrutinise the electronic meters, particularly the possibility of their being rigged to ‘jump’ despite households using exactly the same amount of electricity every month. From where did the companies purchase the new meters, at what price, and why were they installed stealthily, without informing the public in advance? Discoms unwilling to invest in infrastructure (one reason for involving them was ‘investment’) invested twice in electronic meters. They also phased out all permanent staff and use only casual labour for such activities. The impunity with which the discoms have operated over the past 12 years is a chilling exposé of crony capitalism. 

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