Doctor of Philosophy (PhD) Welcome to Open Defense on A Doctoral Thesis Entitled : “A CRITICAL EVALUATION OF MANAGEMENT & ADMINISTRATION OF POWER DISTRIBUTION FRANCHISEE – CASE STUDY OF TORRENT POWER LTD. & CROMPTON GREAVES LTD.” (2001-2011) Submitted to the Rashtra Sant Tukadoji Maharaj Nagpur University, Nagpur For the Award of Degree of Doctor of Philosophy (Ph.D.) In the Faculty of Commerce (Business Administration) Researcher Murhari Sopanrao Kele BE (Elect.), MBA (Marketing), FIE, LL.B, DIT, BJ, EA, ACPDM Supervisor Dr. Pradip D.Ghorpade M.Com. M.A., M.Phil., Ph.D Head of Department, Shivaji Mahavidyalaya, Gadchiroli.
Research Type: Case Study • • Administration: (Public) What is Case study? – A case study is an intensive – Universal process of efficiently analysis of an individual unit (e.g., organizing people and resources so a person, group, or event) to direct activities toward common stressing developmental factors in goals and objectives. relation to context by one or other – It is both an art and a science method. – It is paper work. It is above – Case study is one of the popular management. research method. – Administrators are judged ultimately by their performance. • Research is about: – Administration must incorporate – Success story of Bhiwandi PDF both leadership and vision. – Failure of CGL in Nagpur PDF • Management: (Private) process. – Subset of administration. – Transformation in Administration associated with the technical and & Management. ordinary elements within an – Analysis, evaluation , Conclusions organization's operation. & Recommendations. – Manages employees. – It is how you deal with people .
1 • Power Distribution Sector : – Historical Background – All is not well with this sector – Challenges before MSEDCL – Legal Institutional Framework For Reforms
Power Distribution: Historical Background Year Reforms in Power sector in India 1897 First time electricity distribution in Calcutta 1910 Private licenses in Urban areas only 1948 State Electricity Boards set up 1960 Establishment of MSEB 1996 Orissa privatization 1998 Electricity Regulatory Commissions Act 2002 Delhi Privatization 2003 Electricity Act 2003 2007 First Power distribution franchisee in Bhiwandi 2011 Second power distribution franchisee in Nagpur Features of Electricity: • Electricity cheapest form of energy & easy to transport for long distance. • Cannot be stored in large quantities . • It can be easily converted to heat, light and mechanical power, the form in which the consumer actually needs energy. Nagpur • It can’t be seen, heard, smelt or touched. Bhiwandi • Electricity is treated as commodity and it can be treaded.
Indian Power Sector – “All Is Not Well” Performance & Evaluation of Key areas for focus of attention Electric Supply Utilities Necessity: •Peak Shortage : 12% Availability • Gauging efficiencies & •Energy Shortage: 9 % ranking their performance. •Monitory Losses • Establishing goals of Financial •No Reserve / Surplus Performance performance • Ensuring cost minimization •Poor generation efficiency • Setting target for Technical •Low PLF & High T&D losses improvements • Finalizing resource •Old Plants Environment allocation strategies • High GHG emission • Regulating the sector especially in incentive •Rising commercial losses Commercial •No service orientation regulation & setting •No accountability rational tariffs • Ensuring sustenance of •No Autonomy •Low Human Productivity utilities & sector in long Managerial •No Specialisation run. •Lack of Professionalism
Challenges before MSEDCL MSEDCL:Challenges: Loss Loss Reduction: 1% Loss= reduc 200-250 Crs Exempt tion CPP High Power Purchase ion of license Cost: Rs.2.84 & Av.cost to serve consumer is 4.55/- Private Generators: CPP/IPP & Co-generators are IPP Deemed having their own use/ sale to license third party through Open access provisions. MSEDCL License: Exemption/Parallel/Deemed Open Parallel license provision will loose license Access consumer base of utilities. REC Policy : Distribution business by SHGs, local Consu Threat panchayat,, Co-op.societies. mer of Customer satisfaction : By Satisfac loosing High tion market improving services / by power rationalized tariff. purchas e cost
Legal Institutional Framework For Reforms In PSP & PDF Business • Blue Print by Central MoP recommending the Private Sector Participation Aug 2001 (PSP) in Power Sector. • Distribution Committee headed by Energy Secretary & then Chairman CERC March 2002 Mr., Ashok Basu, recommendation on PSP in distribution business. • Enactment of EA-2003:Promoting competition & franchisee business as per June 2003 Sec-5 & Sec 14 (7) • National Electricity Policy: Feb 2005 • Encourages the role of PSP in distribution, need for PPP model & discharge of responsibility of DF business Clauses-1.5, 5.1.6, 5.4.4, 5.8.6, 5.8.9, 8.3.7 • National Tariff Policy : January 2006 • It acknowledges the efficiency improvement, which could be brought about by deployment of Franchisees in rural areas. Clauses- 5.2, 8.3(5) • Rural Electrification Policy August 2006 • REC stressed on mandatory appointment of franchisees in rural areas under RGGVY schemes, Clauses-7.3,9.5, 9.7 • Regulator’s views/Advice to state Govt. through papers: Policy advise on August 2007 distribution Generation Based Electricity Distribution Franchisee (DGBDF), which promotes distribution Franchisee with the generation Sec-86(2) • Suggestion issued by MERC as per advice to Government of Maharashtra dated Various provisions in process of franchisee, agreement document, Sept 2007 roles of stakeholders, transfer of rights, etc, suggestions were given by MERC to MSEDCL. January 2007 • First experiment of PDF in India at Bhiwandi by Maharashtra.
2 • Importance of Study – Problem Identification – Research Methodology & Design – Rationale of Study – Data Collection & Sampling – Limitations of the study
Problem Identification & Importance of Study • Problems in Power sector- • Importance of Study: – High T&D Loss (nearly 50%). • Power Distribution Franchisee was new emerging – Imposing a heavy fiscal burden on the state subject matter in Power sector. governments . • This concept has opened much business avenue in – Deterring much needed investments in the this sector. sector • Bhiwandi was first experiment in India & were – Adversely affecting service delivery to the looking to be successful. consumers. • Nagpur was second experiment & was not made • Public Sector: Non-professional & monopolistic operative due to various reasons. approach. • Researcher has worked in Bhiwandi & Nagpur • Private sector: Failure of private sector in power • Experienced actual field work before & after distribution. e.g. Orissa Model franchisee. • • PPP : To be implemented to increase investment, No any literature/material was available on this improve operational efficiency & service delivery to topic. • the consumers. There is business potential in this area. • Many areas are in thrust of franchisee in • Distribution Franchisee : It is the latest form of Maharashtra state as well as other states in India. public-private partnership in the distribution sector. • Management & Administration of these cases has • Why Power Distribution franchisee? good impact on business module. – Use of modern technology, • Presently majority of states have adopted this – Investment capability. model, such type of case studies gives direction & – Utilization of latest managerial acumen. way forward through experiences. – Get the efficiencies of the private sector. • Critical Evaluation of these cases will be useful & – Change in business environment. important for all stakeholders, policy makers, – Avoid whole hog privatization. Government & Regulators of Power sector. – Bring in adequate transparency in the system • Locale of Study: Bhiwandi & Nagpur
Research Design & Methodology Research Methodology Research Design • Macro Analysis : Sector • Analytical, Comparative, reforms, origin of franchisee & Qualitative, Descriptive, & its legal base, PPP models & its Developmental. design. • Base year data before • Micro Analysis : Comparison of franchisee & after franchisee. parameters for 10 yrs. before • Observations / opinions of the & after franchisee viz. loss, utility employees, different collection, arrears, trade unions, consumer’s infrastructure, etc. representatives, social • Dependent variables : Loss, institutions, opinion maker recovery, infrastructure, media, etc. are considered for consumer service. this study. • Independent variables : Tariff, • Questionnaire was prepared Conditions in DFA, actual data for above stakeholders.
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