Financial Restructuring Of Discoms & Way forward
21st November 2013
Delhi
Dr Harish K Ahuja
President
Strategy & Corporate Affairs
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Structure
 Power Sector Reforms : Fundamentals
 FRP of Discoms
 Why competition works better than regulations & privitization
 Way forward for taking discoms towards competitive mode.
 Some conclusions : Create Prosumers
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Moser Baer Projects Pvt Ltd
Private and Confidential – For Limited Circulation Only
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Moser Baer Projects – Group Structure
Moser Baer
Projects
Moser Baer (Projects Private Ltd. (MBPPL)
Group
•
Key Investors: Blackstone, IFCI, GE
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Thermal: Madhya Pradesh power project: 2,520
MW, Chhattisgarh power project, 1,320 MW
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Solar:
•
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Thermal
Hydro
Clean Energy (Incl.
Solar Farms)
Coal Mining
Domestic – 223 MW EPC &
Commissioned
International: 63 MW Commissioned
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Hydro: North Eastern India and Nepal 2000
MW, Himachal Pradesh ~500 MW
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Coal Mining: MDO, Chhattisgarh
Company is committed to high quality, low cost and timely
delivery of world class projects
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Economics of
Power Reforms
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Unbundling and Competition
Competition
Competition
Regulation
Regulation
Competition
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Circle of Power Sector Economics
Multi Buyer Multi Supplier
Market Forces
Generation
Retail supply
Competitive
Segment
Discoms
+
Regulated
segment
Transmission Distribution
Natural Monopoly
Regulation
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Basic Elements of Power Reform
To bring Multiple Players especially in competitive
segments i.e. Generation and Retail supply
Economic regulation
SET UP Independent REGULATOR to check -Monopoly Practices in
Distribution/Transmission and avoid Market Power in generation
Competition
IN Generation and Retail supply segment
• By Competitive wholesale Market
• By Competitive Retail market
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Discoms : Bankruptcy to Revival
 NEED Of HOUR: To save discoms is to save complete value chain
 Losses – All Time High,
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- Load shedding.
- The only buyer – Almost bankrupt
- Banks have stopped lending
MOP: Debt restructuring
Political inference, Subsidy & Skewed tariff
Public mindset : Electricity still a public good- Major bottleneck in reforming
discoms
SOLUTION ?
Bail out
Franchisee
APDRP
Privatization
More competition- Open access a legal imperative
State Electricity Distribution
Management Responsibility
Bill ,2013
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Financial management of discoms
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Focal issues
- Discoms Bailout : What Next
- Role of regulators!
1
ry
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Privitization of
supply/content side!
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- Unbundle Discoms : Wire & content!
!
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Discom Bailout : what next
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Where is Competition
•It is a
established fact
that neither
regulations nor
privatization
works ,it’s the
competition
which serves the
best of interests
of electricity
consumers
Multi Buyer Multi Supplier
Market Forces
Generation
Supply
Open Access
Average
Very
Good
Transmission
Good
Distribution
Poor
Natural MonopolyRegulation
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Unbunble Discoms!
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Promote competition on Demand side
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(It is a established fact that neither regulations
nor privatization works ,it’s the competition
Wheeling Business
Supply Business
which serves the best of interests of electricity
REGULATED
consumers )
Competition/Deregulation
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Transparent Billing
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Initiate horuly metering drive by
directing discoms to put
smart/ABT meters
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Separate Wheeling & Supply business.
•Discoms & other retail Players
•Let area discom supply company
be default supplier for few more
years i.e spot rates.
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Reduce cross subsidy
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. Promote direct subsidy to poor
domestic& farmers through Smart
cards.
•Issue Guidilines for retail supplier
on switching .
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Promotion of renewable through
regulatory cess in the begining till
grid parity is achieved.
•Allow more consumers to be open
access/deregulated in next 8 years ie
300 KW, 36000Units per year
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APDRP: Mainly to strenghten
distribution & transmission
network
•Open Derivative markets in next 23 years to see price visibility.
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Let Pension Funds & Insurance
invest money in regulated wheeling
business
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Supplier
Privitization Of Discoms
Past
PPP model & Private discoms
Delhi, Orissa, Surat, Mumbai,Ahemdabad,
Noida, Calutta etc
Chaturvedi Commitee :Mixed
reactions
Present
Frenchaisee
Bhiwandi, Agra,Jalgaon
Shunglu commitee : Mixed reactions
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•FUTURE
•No more transitory model.
•Bring in more suppliers
•Deregulated consumer
can not be
charged with regulated tariff
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•SERC can not regulate Tariff for
Deregulated consumers except CX &
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wheeling charges
•Even for charging power purchase cost
explicit agreement of consumer necessary
• Open access consumers do not need
permission of Discoms to choose other
suppliers,
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•Just information is sufficient
• Discoms though will be default supplier,
but tariff would be mutually discussed.
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Role of Regulators
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CERC
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Move towards Price cap
regulations instead of
cost plus especially for
interstate transmission :
to avoid gold platting
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Open Access – Building
Concensus
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Effective ISO- POSCO
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Derivative markets to
give long term price
signals
to
attract
investment
SERC –
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Tariff Fixation in regular intervals
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Reducing Cross subsidy in +- 20%
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Intrastate POC – not visible
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Enforcing
shedding.
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Prescribe I cap – 18% reserve margin with
supplier
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Enforcing RPO/SPO : promoting prosumers
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Promoting deguralations/open access: By
putting in place timelines for diffrerent loads ;
0.5 MW,100 KWS/50 K units
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Invest in ABT compliant meters to record
houry consumption.
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Promote direct subsidy to poor dom & farmers
through Smart cards.
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Promote use of solar pumps instead of
seprate feede for agriculture
Performance
stds-
No
Load
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Create Prosumers
 “Electricity for all”
 Electricity generated would meet the Prosumer’s growing electricity
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demand and the surplus units would be feed back to the grid
 Ensures political backing and support
 Allows for capital and interest subsidy to be directly given to the
consumer
Rational planning for long term power procurement”
More prosumers will reduce power demand ,in turn will affect
capacity addition.
Saving in Transmission and Distribution cost
R-APDRP (Part B) –Already in place
 R-APDRP Aims at - Renovation, modernization and strengthening the
system
 With Net Metering, Discom can better serve energy deficit customers
(industrial & commercial) & be more profitable, thus improving their
financial health & reducing liabilities
 IT clubbed with Net Metering defined as a set of IT hardware, software and
applications can reduce energy losses
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Thank You
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