01-Dec-2009

Delhi power supply (cont'd)

[This was posted to Hasiru Usiru mailing]
Dear Mr Muralidhar, Thanks for your compliments & for taking my response for what it was meant to be, viz., an attempt to dig deeper into the whole issue and then to put out what I found so that those interested may in turn judge for themselves. I would be a pigmy among the biggies who (I assume) make up the KERC advisory panel currently. Better would be to have a public and transparent consultation before taking these decisions.

You mention that you want to omit Delhi's experience and only consider North Mumbai's experience when discussing Karnataka ESCOMs' privatization, on the grounds of comparing oranges to oranges and not oranges to apples. I'm sorry but that is just cherry picking the evidence to prove a point. I'm saying consider all the cases. The only conclusion then becomes that privatization/reforms is not a silver bullet and that everything depends on the context. The World Bank report I mentioned in an earlier mail (in the context of Rajasthan) says that, Prayas clearly says that, and a Brookings Institute study I'll quote in later mails says that. And the Delhi discoms were given sweet deals - they should be doing better. The govt stake is not a hindrance at all.

You say BEST is running losses & Reliance Infra is running profits. Compare the figures for 2007-08 in these two links: http://www.bestundertaking.com/finance0506.pdf and http://www.rel.co.in/Rel/newsmedia/RInfra_APR_FY_09.jsp . You'll find that the gap for BEST for that year is Rs 221 crores (lower than earlier year). Gap for Reliance Infra is Rs 550 crores. (note: Reliance consumer base is larger than BEST's). Where are the profit numbers? In fact, the last study I mention above finds no relation between ownership and profitability, very reluctantly I might add (link & excerpt in later mails).

Regulators are supposed to be independent. They could lean towards public discoms, but equally they can be won over by the private discoms.

It is heartening that one person, Mr Jairaj, made such a difference. If one person can do so much then the quest should be to retain such people and empower them. It would surprise me that he would advocate privatization when he has seen the improvements that are possible within the current setup. Indeed, he does not mention private distribution in this July 2009 interaction with Bangalore Chamber of Industry and Commerce: http://www.bcic.org.in/files/Interactive_Session_with_Mr_Jairaj.pdf.

I wouldn't mind putting it on Praja, in addition to HU. These mails have grown so huge that I'm not sure they would make sense there.

Regards,
Dinesh.

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