The transformative story of Delhi’s power sector, writes Arvind Kejriwal
From facing a crisis, we now have a win-win situation - for the government, power sector, and citizensUpdated: Aug 15, 2019 07:46 IST
In early February 2014, Delhi was on the verge of a blackout. I had just become the chief minister and electricity distribution companies (discoms) had threatened to push more than half of the city into darkness, citing inability to pay for purchase of power. This was after five years of continuous hikes in power tariffs, which had already made Delhi’s power unaffordable. Despite the extreme tariff hikes, discoms were claiming to be short on cash. The blackout could only have been stopped, they said, if the government bailed out companies. Discoms had extracted ₹500 crore from the Delhi government in 2011 under similar circumstances. Not only did we refuse to give in to these demands, we also pushed harder for a Comptroller and Auditor General audit of their accounts.
What we inherited in February 2015 was a system plagued by years of corruption, incentivised inefficiency and large-scale over-reporting of losses. Delhi’s discoms reported regulatory assets (dues owed by the people of Delhi to the discoms) of ₹11,406 crore the year we were elected. This figure had served as the basis of steep tariff hikes year after year. Today, the regulatory assets for these discoms have reduced to ₹8,400 crore. For the first time, discoms are no longer short on cash. In the same period, Delhi’s power bills are down to being the lowest in the country. It’s a win for the people, and a win for the power sector. It’s also a win for the government, which is no longer under threat of erratic bailout demands. What has been achieved over five years has been nothing short of a miracle.
As much as it has been a result of sheer political will and zero tolerance to corruption, it has also been a result of smart economics, and an unprecedented investment in the power infrastructure of the city. The biggest impact of these reforms has been on the consistency of power supply, with most parts of the city receiving 24 hours uninterrupted electricity, even as peak power demand this summer was the highest in Delhi’s history — at 7,400 MW, compared to 5,925 MW in the summer of 2014.
In 2014, Delhi faced 117 million units of power cuts. Generator sets and inverters were common household appliances. In large parts of the city, summer nights were a living hell due to repeated faults and load shedding. Fast forward to 2018: Delhi faced just 17.8 million units of cuts, 85% lower than in 2014. The biggest contributor towards ensuring consistent power supply has been the 16-17% augmentation in transformer capacity. Relentless pressure from our Members of Legislative Assembly, and expedited allocation of land for transformer augmentation, facilitated the largest expansion in capacity in the history of the city.
Electricity theft is also at an all-time low, and the lowest in the country. BSES Rajdhani, for instance, has seen Average Transmission and Collection (AT&C) losses have been brought down from 17% in 2013 to 8% today. This is because Delhi’s cheap power supply incentivised the mainstreaming of small consumers, who rapidly joined the growing mass of metered consumers. The number of connections has gone up by approximately 20% in the last five years, contributing to further improving the financial health of discoms.
When privatisation of utilities was carried out across the country, each state followed one of the two trajectories. One, improved efficiency, followed by exorbitant tariffs. Two, artificially low tariffs that led to crumbling infrastructure and poor service. The dramatic turnaround of the power sector in Delhi presents to the country a unique model in the supply of basic utilities, one that is both pro-people and pro-industry. Delhi has the lowest tariffs, supplies uninterrupted and reliable electricity, and at the same time, discoms are turning a profit.
On the back of these path-breaking reforms in the power sector, our government announced a Lifeline Electricity scheme under which all Delhi households consuming 200 or less units of power will get a zero bill. Between 201 to 400 units, consumers will get a substantial subsidy upwards of 50%.
Lifeline electricity is in line with the Aam Aadmi Party (AAP) government’s philosophy that providing for a dignified life is the core duty of government. Every government must provide basic services like education, health care, water, power and transport to every citizen regardless of their ability to pay for them. Every household needs lights, fans, one fridge, cooler in the summer, geyser in the winter to survive. By ensuring free supply of electricity for this level of usage, the government is guaranteeing access to a bare minimum quality of life.
Five years ago, we provided lifeline water for free to all households. Counterintuitively, free water up to 20,000 litres per month led to conservation of water each day, because households worked towards limiting usage to come under the free bracket. It increased revenues too as a large number of people opted for meters. We can expect to see similar results of the free electricity scheme as well.
The AAP government’s sound financial management, and honest governance, has led to a doubling of government revenue through indirect taxes in just five years. These additional funds are the direct consequence of the people electing an honest government in 2015. We want to invest this money right back into the people. And on the back of strong power sector reforms over the past five years, Delhi is in a position to do just that.
Arvind Kejriwal is chief minister, Delhi
The views expressed are personal