Re-igniting Private Sector Interest

In
Developing Country Electricity Sector
Workshops on Electricity Sector Reforms & Private Participation
Experiences, Lessons and Outlook

Anil Kr. Sardana

Chief Executive Officer
North Delhi Power Limited, New Delhi, India

November 2003 1
 Presentation Outline

 Brief Overview of TATA Power/Group

 Brief Overview of NDPL

 Road Map of Indian Power Sector & Issues of

North Delhi Power Limited

Reforms

 Opportunities for Investment & Growth

 Risk Mitigation
North Delhi Power Limited

Brief Profile of TPC

 TATA Power -Company Snapshot
Power Telecom Energy Broadband

Mumbai city &

Tata
Transmissio Mumbai–Pune
Generation Distribution Teleservices Tata Petrodyne
fibre
n (TTSL)
optic network
1. Licensesfor basic 1. sale of 0.4 Mio. 1,200 kms. of FOP
telecom services Barrels of Oil & network
Mumbai Mumbai Mumbai
in six states of 2500 MMCF of
North Delhi Power Limited

Gujarat, A.P., Gas

1200 Ckt. kms. 13 Rec. & Distn Delhi, Tamil 2. Revenues of Rs.
1,797 MW
220 KV and 110 Stations, 300 Cons. Nadu, Karanataka 795 Mio. and
KV Sub-stations and & Maharashtra. PBT of Rs. 270
1000 Kms. of HT / 2.O.2 Mio. Fixed Mio.
Independent LT Cable Network. Line & 0.15 Mio.
Power Mobile
Tala Project North Delhi
Generation Connections
Power Ltd.
(“IPP”) Tata
(NDPL)
Teleservices
81.3 MW 1,150 km; 400 kV
0.8 mm consumers; Maharashtra
850 MW Load ; Limited
Captive Power
Generation 6000 MUs Energy
1. Acquisition of
(“CPP”) Distd.; 2600 Ckt.
existing operational
Kms. of Network Panatone Finvest
network of Hughes
([45%] stake in
382.5 MW Tele. VSNL)
2. About 0.2 Mio. Fixed
Line Phones
North Delhi Power Limited

Brief Profile of NDPL

 North Delhi Power Limited (NDPL)
Profile
Area 550 Sq Kms
Population 4.5 Mn.
Peak Load 1050 MW
North Delhi Power Limited

Estimated annual energy 5,500 Mn. Units

requirement
Total registered consumers 800,000 (Actual estimated 1 Mn.)
Per capita consumption (Units) 1225 (National average 350)
Number of employees 5268 (At the time of take over
5400)
Local generation 15% (Balance purchase from
Northern grid)
Load Growth 07% - 10%
 NDPL – Key Goals
What We Desire to be after 5 Years
AT&C Loss Consumer System reliability to Establishing Tata
< 20% Service & IT be comparable with Brand image in
interface to be good utilities in India. terms of TBEM
Comparable Parts of areas (ideal standards and a
with world zones) comparable show case for all
standards with best in India stakeholders
North Delhi Power Limited

What NDPL Has inherited

Large gap between

No concept of Electricity supply
AT&C Loss > existing and Tata
consumer service system on the
50% work Culture and
and no IT interface verge of collapse
standards
 Opportunities
North Delhi Power Limited

for Investment & Growth

 Driving Factors for Reforms

 The demand for power is increasing and so is the gap between

demand & supply
 To achieve a GDP target of 8%, power sector has to grow by a
North Delhi Power Limited

rate of 10%
 Only Reforms can bring the financial viability and hence the
augmentation of capacity.
 Abundance of fuel resources – Hydro, Coal, Gas
 Political awareness and realization
 Electricity Act 2003
Opportunities in Indian Power Sector

 Consumers allowed to source electricity directly from

generating station.
 No License for generation /distribution in Forward Rural
North Delhi Power Limited

Areas-Opportunities for Distributed Generation

 Third party sale through Open Access
 Freedom for setting up Captive Power Plant
 Antitheft Legislation
 Concept of Distributing Electricity through Franchisee
 Other businesses including JVs, Associations etc.
 Current Losses & Revenue Gap
Particulars Paisa / Cents /
KWH KWH
No. of units of power purchased 2 2
Cost of procurement per unit 200 4.41
Cost of distribution 65 1.43
North Delhi Power Limited

Total cost of supply (procurement minus 530 11.69

distribution)
Losses (say) 50% 50%
Payment finally recovered from no. of 1 1
units
Required average tariff to recover full cost 530 11.69
of supply
Current average tariff 240 5.29
.. Severe Tariff Shocks to reduce the Gap - Unsustainable
 Distribution Reforms
Need for Government Support During Transition
Phase for Sustainable Reforms
T ra n s itio n s u p p o rt A m o u n t

in o n
l dra
tu a
North Delhi Power Limited

erp e
o rms–p
th o u t ref es
Wi eso urc
. r
G ov t

Wit
h
bac reform
k
per ende s – Li
iod d lo m
. an d ited S
urin up p
g tr o
ans rt as
itio
Transition Period
n
…. Reforms to release Govt. funds for priority sectors
 Indian Power Sector Reforms
Risk Mitigation Issues
Issues How This is being Taken Care
Govt. Govt. committed to the Success of the Reform Process –
Commitment  Clear cut Policy directions as per Electricity Act 2003
 Committed Support
 No political interference – SERCs are in place
North Delhi Power Limited

Change of  Reasonable stability not existing but is expected to be provided

in the next one year through policy . Plans and guidelines by
Operating Government and CERC.
Norms
Enforcement of  This is still a gray area and Government has to come out with a
clear policy w.r.t existing contracts.
existing
Contracts
Tariffs  Long Term Tariff Guidelines being issued by Government.

Assured  The Policy Guidelines Ensures 16% RoE at all times

Returns  BST to be the balancing factor
 Indian Power Sector Reforms
Risk Mitigation Issues
Issues How This Can Be Taken Care
Base Line Data  Reduced scope for baseline data errors with AT&C loss
and Loss Levels concept as approved by Regulator

Asset Valuation  Assets valuation through Business Valuation, based on

revenue earning potential, is the only solution acceptable to
all stakeholders
North Delhi Power Limited

Serviceable  Limited to Last Months Receivables

Liabilities and  Past receivables to the account of Government
Receivables  Level of Receivables In Line with the Avg. Monthly Billing
for last 6- Months

Regulatory  Full Involvement from beginning is essential and is further

facilitated by EA 2003.
Involvement
 Required through transitional support coupled with soft
Funding loans for capital investment
Support
 Way Forward ….
 Congenial environment for private investors.

 Lower amount of investment needed due to open access.

North Delhi Power Limited

 Lot of risks are mitigated (Power Off take and Returns) –

Distribution along-with Generation.

 Competitiveness will bring improvement in quality and reliability

of power supply.

 Consumer Demands would lead to Efficiency & thus

Satisfaction.
 Thank You For Patient
Hearing
North Delhi Power Limited

And
Looking Forward For
Interactions