management wizardry

text of the letter sent to the New Indian Express:

I refer to the report in you columns today (August 28th,’07) under the caption 'pending subsidy release in phases', alluding to a statement made by the CM that pending subsidy amounts of the orders of Rs 2400 crores will be released to the ESCOMS ‘without affecting their working’.

Now, Rs 2400 crores is a lot of money. In quite a few cases, the respective allocations are higher than even the annual revenue earnings of some of the ESCOMS. If their release has to await the benevolence of the CM, then it will require far greater expertise than available at even our IIM’s to manage them ‘without affecting their working’. Besides, this whole arrangement cannot be defined as a business any longer. So, why the pretense of running them as businesses when, by classifying as ‘social services’, the government can earn the goodwill of the ‘aam aadmi’, as also become eligible for exemption from the various central levies?

And, as for industry, business, trade and the upper classes, anyway they are hardly dependent on the ESCOMS for their needs.

an exchange with Dr S

Dr S: Your suggestion of privatization of distribution is a sound one provided it is done in the right spirit and to the honest and competent company. There are any number of companies which would be happy to take over. They will strip all the assets and bankrupt the company and walk a way. That is a worst case scenario. Unfortunately we just do not have many good companies. Still I am all for privatization.

MR: I am surprised at your observations, Sir! Tata’s certainly cannot be termed as fly-by-night operators. They have been in the field from long and doing a good job, particularly in Mumbai, and lately in Delhi. So, have the RPG group in Kolkata and Greater Noida, and Reliance in Mumbai, and now in Delhi. Then you have the Ahmedabad Electricity Supply Co Ltd (possibly belonging to the Torrent group), Surat Electricity Supply Co Ltd, etc, etc, all of whom have been doing a far better job than the Electricity Boards, or their new incarnations - the ESCOMS.

Dr S: But you did not suggest an alternative to nimby excepting to produce power at the mines. Is this a good strategy to have all your eggs in one basket? Should not we have power in different places.

MR: Even London depends on a nuclear power plant across the channel in Graveline in France for a large share of its power requirements. So, what are we talking about? Besides, the chance of disruption of power supply across the grid is far lower than disruption of coal supplies across oceans or across the entire stretch of the sub-continent (all the way from the coal belts in Orissa, Jharkhand, etc). Ideally, the entire Karnataka base load could be on the imported NTPC/ PGCIL power, as well as on locally generated (Raichur & Bellary) thermal power, and the peaking load can be on the local hydel (Sharavati & Kali) power. We have enough capacity for that. All future requirements can be met through imports from NTPC/ PGCIL. Alternatively, KPCL can set up generation capacity in Orissa/ Jharkhand on a power sharing arrangement, and transmit the state’s share through PGCIL’s lines.

Dr S: I have not taken a stand against Chamalapur for that reason. I am against coal. But I am for gas. Gas will not have most of the problems of coal. We are importing coal and we might as well import gas. Of course gas costs far more than coal. But we pay more for externalities in the case of coal. This is some thing we as a society should decide. Do we want "cheap" power over environment or are we prepared to pay for environmental protection.

MR: You have raised valid questions, as also answered a few of them yourselves. I have focused largely on the merits of generating power at pit-head stations and transmitting it to user points, even if far flung, as compared to transporting coal there and burning it. Coal, whether burnt in Talcher or in Chamalapura, will contribute equally to global warming. And, if it has not gone through the benefication process, which invariably is the case in India, half the quantity you are transporting is anyway just muck. In Talcher, you atleast have the possibility of pumping the fly-ash into the used pits and attempting re-afforestation on the surface, neutralizing the harmful effects, even if partially. As compared to that, in Chamalapura, you will land up dispersing the fly-ash over the local land-scape, in the process degrading the air and soil quality considerably, for miles on end.

Even with all the attempts at conservation, when the economy is growing at close to10%, we still need sizable fresh generation capacity addition. Given the overall scenario, India doesn’t appear to have too many options other than exploiting its enormous coal reserves, at least in the immediate future. Yes, it will mean adding to global warming, and gas is perhaps a better option from that perception. But, its prohibitive costs have led to the Bidadi and Dhabol projects, which were supposedly based on it, not even taking off.

There are no easy answers. But there are definitely simpler answers compared to what the government is considering.

an exchange with Mr R

Lack of political will to enforce the law, Sir! When Anil Ambani's Reliance Power raises a bill, even Dawwod Ibrahim's henchman in Dharawi (Mumbai) pays up on time, fearing disconnection in case of delays. As compared to that, all it requires here is for a call from the local Corporator's PA to carry on merrily without a sanction or a bill. In fact, a KERC member admitted recently in an open public forum that the non-payers in Karnataka form a far more powerful lobby than the payers. And, quite the height of it all was when a Delhi state cabinet minister was running a full-scale battery charging unit on an unauthorised connection for years together under the erstwhile DESU regime. Of course, things have now changed in Delhi after the take-over by Tata's and Reliance.

Muralidhar Rao

On 8/28/07, Mr R wrote:

Can we not have the law applied to collect monies due. We are seeing it applied to the rich and famous!

R

no thermal plant in my backyard, please!

text of the letter sent to the press:

From Nandikur to Tadadi to Chamalapur, nobody wants a thermal power plant in his backyard, particularly when a major part of the power generated is going to be feeding consumers not in the immediate neighborhood, but in distant Bangalore.

Now, there doesn't appear to be much of an appreciation, amongst the powers that be, that in order to meet the state's demand for power, it doesn't require coal to be transported from afar and burnt here. There is a far more efficient and cost-effective option as has already been amply demonstrated by the NTPC (National Thermal Power Corporation Ltd) - PGCIL (Power Grid Corporation of India Ltd) - KPTCL (Karnataka Power Transmission Corporation Ltd) arrangement, whereby Karnataka is able to tap at Whitefield (in Bangalore) 750MW of power generated at Talcher in Orissa. And, NTPC/ PGCIL will be happy to augment that capacity and supply as much power as is needed by Karnataka, provided KPTCL gets itself into a position to pay for the power on time. To know where that situation stands as of now, all you need to do is to visit the KERC (Karnataka Energy Regulatory Commission) site which will tell you that for purchases of the order of Rs 24,830 million, KPTCL owes KPCL (Karnataka Power Corporation Ltd) Rs 21,046 million any given day, ie a debtors-days figure of an incredulous 309. If I understand the Company Law guidelines correctly, this entire amount will have to be shown under 'doubtful debtors' in the KPCL balance sheet. Given such a scenario, it is surprising that NTPC/ PGCIL even maintains a relationship with KPTCL, fearing as it should be of similar treatment should a maverick politician came on to the scene and issued orders that way.

And, that exactly is the problem. With the interference in the running of the ESCOMS by the politicians, they are not able to collect their monies on time to pay up KPTCL, which in turn is not able to pay KPCL on time, and the vicious cycle perpetuates.

And, the truth of the matter is that this problem can be solved only through privatization of distribution, perhaps on the lines of the model adopted by New Delhi, in the cities. And, as for the rural areas, there is the excellent Hukeri Co-op Society model, which at worst may require a bit of tweaking.