53

CHAPTER – III

POWER SECTOR REFORMS IN INDIA

54

3.1 POWER SECTOR REFORMS IN INDIA

In the modern world, the key progress of a nation is availability of electrical energy.

Countries individually and collectively have been drawing up plans to tap, develop and

utilize energy. Electricity was introduced in India for commercial use in the year 1989, for

the first time at Darjeeling by constructing a mini hydro electric power house of15KW on a

small rivulet1. The Govt. of India framed Electricity Rules in1910 ensure fair distribution and

supply of Electricity.

In line with Industrial policy Resolution of 1948, the Govt. of India played a dominant role in

initiating and regulating development in key sectors of the economy which included the

Indian Electricity sector also. According to the VIIth schedule of Indian constitution

“Electricity” is a concurrent subject (Both the parliament and state legislature are empowered

to make laws). The Electricity supply Act 1948 provided for the establishment of the Central

Electricity Authority (CEA) and of State Electricity Boards (SEBs)2, which were main

agencies for supplying power throughout India. The Central Electricity Authority will

develop National plans and help formulate National Power policy. The SEBs were

autonomous bodies responsible for generation, transmission and distribution of power in their

respective states.

The Industrial policy Resolution 1956 reserved the generation, and distribution of electricity

almost exclusively for the states, letting the existing private licensees. Amendment in 1976

enabled Central Government to set up National Thermal Power Corporation Ltd., (NTPC),

National Hydro Power Corporation Ltd (NHPC), North Eastern Electricity Power

Corporation Ltd, (NEEPCO) Mysore Power Corporation and Water and Power consultancy,

Services etc.

Electricity is very much crucial factor in achieving economic, social and environmental

objectives of sustainable human development. In the present digital age, electricity is

emerged as the critical input for sustaining the process of economic as well as social

development. Though the Indian Power sector has achieved substantial growth during the

Post Independent era, the sector has been ailing from the serious functional problems during

the past few decades. Per capita consumption of electricity in India increased from 178 KWh

55

in 1985-86 to 338 KWh in 1996-97, and to 665 KWh in 2005-06. The power sector annually

avails a substantial share of (about 13% - 18%), the outlay of the National Economic plan.

But most of the State Electricity Boards (SEBs) in India have been working under resource

crunch and operating at massive commercial losses. The inefficiencies were mainly due to

the following3.

1) The technical performance of the SEBs was not satisfactory. Transmission &Distribution losses are very high, of the order of 22.9%).

2) Thermal power stations were operating at very low efficiency and with average plant load factor of only 53.9%.

3) Poor billing and collection, because of incorrect reporting and billing and inadequate collection efforts, tampering with meters, and misreporting in collusion with consumers.

4) Unmanageable size and monolithic structure, making unwieldy, inefficient and unresponsive to change as well manpower related problems, poor productivity, low skills and lack of training for up gradation and low motivation levels, etc.

Reliability and accessibility continue to be a serious problem. The energy and peak shortages

of power have been around 7.5% and 12.1% respectively, leading to brown outs and

blackouts across the country. Scheduled power cuts, unscheduled outages and incorrect

voltages are common in most states, leading to enormous disruptions in all aspects of

common life. This was led to operational inefficiencies for firms across the country and a

substantial wastage of capital that is blocked in the voltage stabilizers, inverters, generators

and in replacing the burnout motors.

3.2 GENERAL ELECTRICITY POLOCY:

Indian electricity policy aims at providing cost effective, affordable and secured access to

electricity for all. Given the large rural population rural electrification remains an important

abjective. The Govt. of India in conjunction with state government should4

� Use indicative planning and the normal techno-economic project clearances to guide technical choices and power mix.

� Define and implement principles on which tariffs are set by through independent regularity commissions.

� Increase the level of public funds in this sector to encourage development. � Create an environment that will attract private players. Most of the electricity supply

industry in India remains in public sector. The central govt. through public companies owns and operator one third of the power generation and interstate exchanges. At the state level SEBs own, and operate most of the remaining two thirds of generation capacity.

56

The SEBs are effectively bankrupt as a result of political interference and mismanagement.

For the lost several years their revenues have been insufficient to cover the cost of providing

electricity. The second problem is ineffective decision making process in SEBs. There is no

incentive for technical staff to implement or run cost effectively. The results of unreliable

power supply, SEBs inefficiency and ineffectiveness clearly impair the sustainable

development of Indian power sector and act as bottleneck for economic growth and

development. Hence policy changes to reform the Indian electricity supply industry have

been developed with the support of multilateral agencies such as World Bank.

Since 1991 the government has promoted private sector participation. Public opinion in India

appears increasingly aware of the adverse effects of populist measures resulting in under

pricing of electricity and degraded service. Therefore the need for an economically viable

power sector has been realised. This gradual change of opinion should put pressure on

political leaders.

Recommendations: in its pursuance of sustainable energy development, the govt, of India

should identify, define and separate economic, social and environmental policy objectives

(Exhibit 3.1).

There is a crucial need to reduce subsidies by central and state governments to the electricity

sector. Accelerating subsidy reductions will reduce the burden on public finances, freeing

money for public investment. Given the paucity of public finances in the states, subsidizing

electricity consumption is unsustainable. Following are the recommendations of the

committee.

� The electricity power system in this emerging economy requires considerable investment. The central government should promote market expansion to facilitate investment, rationalize tariffs, and develop competition.

� Specifically the central government should foster the technical, economic and institutional integration of the electricity supply industry. Consolidated political leadership is needed for the whole energy sector. This leadership would bring together the often disparate and competing offices responsible for the development of electricity, coal and water resources for hydro electricity.

� The Indian transmission system must be expanded to reduce shortages, facilitate competitions and respond to growth in demand. This requires the development of a

57

national network of transmission lines (400 KV and above) enabling numerous power exchanges between states.

� The SEBs need to have an entrepreneurial focus and should be corporatized to improve their efficiency and financial leverage. Sound internal business practices and specific cost reducing goals should be introduced to guide the decision making process. Within the SEBs and or their coproatised entities, the various hierarchical levels should be better managed and given more financial autonomy. The decision making process should be streamlined and staff should be rewarded for improvements in cost efficiency.

� Principles of accountability and independence from political interference should be enforced in SEBs. The functions of generation, transmission and distribution should be separated vertically in all Indian states so that cost components and profit centers can be identified. Separate companies could be created to fulfill each function.

� The central government should control effectively electricity industry, including using financial rewards or penalties.

� The government needs to ensure improvement in data quality, availability and transparency. Currently available electricity data are not accurate enough. This is of special concern, because reporting at state level often underestimates losses and hampers the assessment of subsidies.

� The government should design an integrated energy resource plan leading to a cost efficient national power system. This is indispensable because of the existing market deficiencies in primary energy supply and the need to reduce the risk associated with the development of IPPs.

� The private sector should be encouraged to participate at all levels of supply chain (generation, transmission and distribution). Investment needs are too large to be met by public finances alone, and more competition is needed. An investment frame work providing a secure, level playing field for private investors must be enforced. The process of contract allocation must e made transparent and contractual terms must be enforced. The high risk perceived by foreign and domestic companies entering an imaging market needs to be better understood and analysed by the authorities so that risks are mitigated and fear allayed. This calls for stringent selection, prior clearance and improved definition of the terms of reference for project before participation is invited.

58

EXHIBIT 3.1

INDIA RESTRUCTURING AND POLOCY REFORMS Major

Reasons

Policy Interventions Principal components of Reform

strategy

1 2 3

Large scale losses and high degree of inefficiency in the utilities.

Induction of private investment into power generation which is most capital intensive.

Foreign investment allowed both as a joint venture and as a fully owned operation with 100% foreign equity in thermal, hydal and wind or solar energy without any limitation to size.

Deteriorating Demand supply balance.

Segregation of the regulatory functions from the Government and vesting them in an Independent Regulatory commission.

Foreign equity participation up to 74% in generation and transmission automatically approved by RBI.

Adverse impact on the economy.

Unbundling the various activities from a vertically integrated unit to distinct and separate units based on functions.

Automatic approval of foreign equity participation up to 100% is permitted for electricity generation, transmission and distribution for foreign equity investment not exceeding 1500 crore.

Corporatisation of various units, namely, vesting the units in a company incorporated under the companies Act 1956.

Private sectors companies may operate either as licensees, distributing power in a licensed area, either through own generation or from purchased power.

Tariff Reform. Captive power plants set to serve Industries are permitted to sell or distribute surplus power to SEBs.

Private Sector Participation where ever the same is considered by the state to be advantageous.

Private companies are allowed to debt – equity ratio up to 4:1 i.e. the equity component should be minimum of 20% of the total out lay. Promoter’s contribution at least 11% of the total outlay. Maximum 40% of the total outlay by the Indian Public financial Institutions.

Electricity regulatory commission both at the centre and the states for rationalizing tariff and other allied matters.

Licenses will be given for longer duration, 30 years in the first instance.

Mega power projects (over 1000 MW) allowed free imports of capital goods

Source: Government of India, Economic Survey 2002-2003 – Ministry of Finance, New Delhi, 2003. P-181.

59

Table 3.1 shows the basic problem faced by the power sector, which is nothing but the gap

between user charges and the cost of supply. The gap between the supply and the average

tariff has actually worsens over the succeeding years, from a level of 23 Paisa in 1992-93 to

about 110 Paisa in 2001-02. Revenues dropped from 82.2% of cost in 1992-93 to 68.6% in

2001-02. This suggest that as of yet, reforms in the functioning of SEBs have not yielded the

desired results and motivates a prime focus upon the functioning of the SEBs in power

reforms.

The impact of reforms could be seen very distinctly in some major operational areas. For

instance, the plant load factor (PLF), an important measure of the operational efficiency of

thermal power plants, of the overall system has improved significantly from 64.7% in 1997-

98 to 71.1% in 2002-03, implying a secular improvement in the efficiency of generation and

the same is depicted in Table 3.2

One of the major controversies that are fast erupting after the power sector was opened for

Private sector is the issue of loss to the state exchequer caused by protected subsidies given

by the state to various categories of activities and groups. The issue of cross subsidies

extended by industrial and commercial customers (they pay Rs. 2.34 per KWh) to the

agriculture and domestic (who pay 0.21 and 0.91 KWh respectively) often comes up as this

compensates 42% of the subsidy to these two sectors.

Electricity pricing, therefore, is a very crucial issue in both internal and external trading. The

All India average unit cost of power supply was 350.30 paisa / KWh where as the average

tariff was 240.3 paisa / KWh in 2001-02. Table 3.3 shows that a large uncovered gap still

exists between the cost and tariffs of power supply in India.

There has been remarkable increase in the demand for power because of burgeoning

domestic demand on account of changing needs of the consumers, rural electrification

projects, and the emphasis on the power driven industrialization particularly in the aftermath

of the liberalized economic regimes.

The sector wise consumption pattern in India is given in Table 3.4.

60

TABLE 3.1:

RECOVERY OF COST THROUGH TARIFF

Year Average Cost/

Unit (Paisa)

Average Tariff

/ Unit (Paisa)

% Recovery of

Cost (Paisa)

1992-93 128.2 105.4 82.2

1993-94 149.1 116.7 78.3

1994-95 163.4 128.0 78.3

1995-96 179.6 139.0 77.4

1996-97 215.6 165.3 76.7

1997-98 239.7 180.3 75.2

1998-99 263.1 186.8 71.0

1999-2000 305.1 207.0 67.8

2001-02 349.9 239.9 68.6 Source : Govt. of Indian, Economic Survey 2002-2003, Ministry of Finance,

New Delhi 2003, p 181.

61

TABLE 3.2:

THERMALPLANT LOAD FACTOR (in %)

Description 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

State Electricity Board

60.9 60.7 64.3 64.30 67.0 67.5

Central Sector 70.4 71.1 72.5 72.2 74.3 75.7

Private Sector 71.2 68.3 68.9 76.4 74.7 82.0

Northern Region 66.7 67.2 71.0 72.0 75.1 74.8

Western Region 70.3 70.5 72.3 72.1 74.2 75.2

Southern Region 77.1 75.4 79.6 79.7 82.3 84.6

North Eastern Region

21.3 18.7 18.3 18.2 16.8 14.4

All India 64.7 64.6 67.3 67.7 69.9 71.1 Source: Planning commission of India as reproduced in Economic Survey 2002-03.

62

TABLE 3.3

FINANCIAL PERFORMANCEOF THE STATE POWER SECTOR (Rs. Crores)

Description 1991-92 2001-2002 2002-2003 (RE) 2003-2004 (AP)

A. Gross Subsidy Involved (i) on account of sale of Electricity to (a) Agriculture (b) Domestic (c) Inter State sales TOTAL

5938 1310 201 7449

24013 10347 227 34587

24759 8383 142 33283

23936

(ii) Subventions received from State Government

2045 8680 10762

(iii) Net Subsidy 5404 25907 22521

(iv) Surplus generated by Sales to other sectors

2173 3698 4908

(v) Uncovered subsidies 3231 22209 17613

B. Commercial losses

(i) Commercial losses excluding Subsidy @

4117 24063 24614

(ii) Commercial losses (excluding subsidy)

NA 15383 13851

C. Rate of Return ROR% -12.7 -32.8 -35.4

D.Revenue mobalisation,/additional revenue mobalisation from achieving

(a) 3% ROR 4959 26266 26699

(b) From introducing 50 Paisa per unit from agricultural Irrigation.

2176 1078 1002

Source : Planning Commission of India as reproduced in Economic Survey - 2002-03

RE - Revised Estimates- Provisional AP - Annual Plan Projection @ Common uncovered subsidy because they include financial results of other activities undertaken by the SEBs.

Note :

1) The information relating to subsidy for agriculture, domestic, and interstate sales for the year 2003-04 in respect of Orissa and Delhi is not available, as the distribution is entrusted to the Private Companies, Commercial loses pertaining to GRIDCO of Orissa and Transmission Company of Delhi only.

2) Information in the case of Andhra Pradesh, Haryana, Rajasthan, Uttar Pradesh and Karnataka States is relating to distribution companies set up after the reforms.

63

TABLE 3.4

ELECTRICITY CONSUMPTION BY ECONOMIC GROUPS (Utilities) (Percent).

Year Domestic Commercial Industry Traction Agriculture Others

1950-51 12.6 7.5 62.6 7.4 3.9 4.0

1960-61 10.7 6.1 69.4 3.3 6.0 4.5

1970-71 8.8 5.9 67.6 3.2 6.0 4.5

1980-81 11.2 5.7 58.4 2.7 17.6 4.4

1990-91 16.0 5.9 44.2 2.2 26.4 4.5

2000-01 23.9 6.1 34.2 2. 26.8 5.6

Source : Government of India. Economic Survey 2002-2003 – Ministry of Finance, New Delhi 2003, P. 5-27.

64

In India, the demand for electric power has been increasing rapidly compared to addition in

capacity in 1990's the growth rate of electricity consumption has been consistently over 80%

consequently, the country is faced with both energy and power shortage. The annual energy

requirement of the country is of the order of 480 Billion Units (BUs) against which the

availability is 450 BUs, resulting in energy shortage of 30 BUS (6.2%). In the demand

structure of power western region constitutes the highest with over 33% of the total power

demand in the country, followed by 28% in the Northern, 27% in the Southern, and 12% in

Eastern and North – Eastern region together. The Indian Electricity market is segmented in to

five district regions. The total installed capacity in all the regions combined is approximately

1, 00,000 MW and the total peak demand is approximately 75, 00,000 MW. National

Consumption is over 4, 85, 000 GWh.

The demand for power during 2001-02 was 82 GW (Giga Watts) (Peak) and 523 BUs

(Billion units) (Energy). Availability of power was falling short of this and as a result, the

country experienced 7.5% of shortage of energy and 12.6% shortage of peaking power. The

projections in demand as per the 16th Electricity power survey of government in 2001 are

shown in Table3.5.

i. This demand projection can be impacted upon by a number of factors including

ii. Impact of reform on the improvement in operational and managerial efficiency of the

sector and the reduction in the cost.

iii. Changes in the development policies and new pattern of investment injected by the

economic liberalization.

iv. Anti theft legislation and reduction in T&D losses.

v. Tariff rationalization and its impact on demand through price elasticity.

The Union power Ministry's own estimates peak demand power short fall at an alarming 20%

- 21%. The situation in 2000-01 gives a graphic picture of the gaps in demand and supply

(Table – 3.6).

65

TABLE 3.5:

ALL INDIA PROJECTED DEMAND

Region Energy Requirement (MWh) Peak Load (MW)

2006-07 2011-12 2016-17 2006-07 2011-12 2016-17

Northern Region 220820 308528 429480 35540 49674 69178

Western Region 224927 299075 395859 35223 46825 61966

Eastern Region 69467 90396 117248 11990 15664 20416

Southern Region 194102 262718 354599 31017 42061 56883

North Eastern Region

9501 14061 20756 1875 2789 4134

All India 719097 975222 1318644 115705 157107 212725 Source : 16

th Electric Power Survey, Central Electricity Authority, New Delhi 2002.

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TABLE 3.6:

REGIONWISEPOWERSUPPLYPOSITION DURING 2001-02

Region

Requirement Availability Shortage %

Peak (MW) Energy

(MU)

Peak (MW) Energy

(MU)

Peak

(MW)

Energy

(MU)

Northern 23200 150383 21346 142410 8 5.3

Western 26510 175016 22024 156793 17 10.4

Southern 22757 140516 19201 128095 15.6 8.8

Eastern 7940 50687 7648 50197 3.7 1.0

North Eastern

1148 5935 1043 5855 9.1 1.4

All India 81555 522537 71262 483350 12.6 7.5

Source : 16th

Elec. Power Survey, Central Electricity Authority, New Delhi 2003.

67

Region wise projection of power demand and supply for the year 2012 indicates a serious

shortfall in all the major regional power markets viz Northern, Southern and Western.

(Table3.7). Since the projected surplus power in the Eastern and North-Eastern regions

would not be adequate to meet the gap in demand, the impact of power from the neighboring

countries will be the only the least cost viable option available.In order to meet power and

energy demand, the anticipated requirement is to the order of 10,000 – 15,000 MW capacity

addition every year during the next 10 years. This addition would be possible only if the

independent power producers (IPPS) and mega power developers participate in the power

sector development. Table 3.8shows the district wise percapita consumption of power by

various economic groups for the year 2008-2009 and 2009-2010.

68

TABLE 3.7

INDIA’s SUPPLY / DEMAND SCENARIO THROUGH 2012

Region Demand in

2001 (MW)

Projected

Demand

2012 (MW)

Planned capacity

addition by 2012

(Central Govt.)

(MW)

Surplus or

shortfall

(MW)

Northern 21000 49000 14000 (-) 14000

Southern 20400 42000 10000 (-) 12000

Western 24900 46000 16000 (-) 51000

Eastern North Eastern

8750 19000 23000 (+) 12750

TOTAL 75050 156000 63000 (-) 17950

Source : 16th

Electric Power Survey, Central Electricity Authority, New Delhi – 2003.

69

TABLE 3.8

PATTERN OF ELECTRICITY CONSUPTION – ALL INDIA

S.No. Sector Shares as percentage to Total

99-

2000

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

1 2 3 4 5 6 7 8 9 10

1 Domestic 19.95 21.28 22.03 24.55 24.86 24.77 24.3 24.36 24.09 24.64

2 Commercial 4.94 5.17 5.25 7.49 7.81 8.13 8.73 8.80 9.30 10.15

3 Industry 32.60 30.50 30.18 33.85 34.51 35.63 36.8 37.58 37.74 39.38

4 Agriculture 29.91 29.14 29.69 24.88 24.13 22.93 21.92 21.73 20.75 20.43

5 Others 12.59 13.92 12.85 9.23 8.68 8.54 8.25 7.53 8.12 5.40 Source : "Annual Report on working of Electricity Boards and ED's" by Planning Commission / New Delhi, May

2002. All India Electricity Statistics General Review 2010.

70

3.3 OBJECTIVES OF POWER SECTOR REFORMS

5.

� To supply electricity to the customers under the most efficient conditions in term of

quality and cost in order to support the economic development of the state.

� To take effective steps to enable the power sector, to mobalise from within the sector,

adequate financial resources for financing grid expansion requirements.

� To create an operating and regulatory environment conducive to investment and

competition so as to foster entry of private participation into power generation,

transmission and distribution and to attract the capital and expertise required to

support the power system up gradation, expansion and service quality improvement.

3.4 PRE REFORM STRUCTURE6:

As per the constitution, power sector is a joint responsibility of state and Central

Government. Power sector is governed by three principle Acts, namely:

(i) The Indian Electricity Act 1910. (ii) The Electricity (Supply) Act 1948 and (iii) The Electricity Regulatory Commission Act 1998.

The Indian Electricity Act 1910 deals with functions and regulation of the Private licensees

where as Indian Electricity (Supply) Act 1948 deals with establishment and functioning of

state Government owned integrated monopoly utilities (with in the state) called State

Electricity Boards (SEBs). The most recent Electricity Regulatory Commissions Act 1998

provides for establishment of State Level and Central level Electricity Regulatory

commissions (ERCs) for regulating the functioning of Private Licensees as well as states.

Chart3.1 depicts the Institutional Structure of the power sector in India before evolution of

the Independent power producers (IPP’s) and Independent Regulatory Commissions.

71

CHART 3.1

INSTITUTIONAL STRUCTURE OF INDIAN POWER SECTOR

BEFORE REFORMS

Source: Prayas, Issue1 October 2001 p.4

72

The Indian Electricity (Supply) Act 1948 led to evolution of state owned State Electricity

Boards, (SEBs), which were formed in 1960, and soon took over numerous small private

generation and distribution utilities in the respective states. SEBs is integrated utilities with

monopoly over generation, transmission and distribution of power within the state. Except

little urban based private distribution, licensees in the cities like Mumbai, Kolkata, and

Ahmadabad, entire distribution is in the hands of SEBs. In the late 1970s the Central

Government established National Thermal Power Corporation, (NTPC), for generation of

power from large pit head coal, thermal generating stations. Currently NTPC accounts for

around 25% of India’s total installed capacity and sells power to various state utilities. (I.e.

SEBs). Apart from NTPC, the Central Government also established companies such as

Bharat Heavy Electricals Limited (BHEL) and power Grid Corporation of India (PGCIL) for

manufacturing of electrical equipment (turbines, boilers, and transformers etc) and for

refection and maintenance of interstate transmission lines respectively. The Central

Government also regulates investments in Power sector through its agencies such as CEA

(Central Electricity Authority) which was created as per the Indian Electricity (Supply) Act

1948. All the generation and distributions schemes above a particular size require approval of

CEA.

3.5 MAIN POLOCY CHANGES:

The government’s main objective is to make power available and affordable to all. In

December 1996, the Chief Ministers of all the states recognized the need to reform the

electricity supply industry. The following extracts indicate the intended direction of the

reforms7.

� The gap between demand and supply of power is widening. � The financial position of the state Electricity Board is fast deteriorating and the future

development of the power sector cannot be sustained without and improvement of operational performance of State Electricity Boards.

� Reform and restructuring of State Electricity Boards are urgent and must be carried out in a definite time frame.

� The creation of Regulatory commissions is a step in this direction. � The requirement of future expansion and improvement of the power sector cannot be

fully achieved through public resources alone and it is essential to encourage private sector participation in generation, transmission and distribution.

� A natural consensus has evolved for improving the performance of the power sector in a time bound manner and the following is adopted.

73

I. State Electricity Regulatory Commission.

II. Each State / Union territory shall set up an independent State Electricity Regulatory

Commission. Licensing, planning and other related functions could be delegated to

SERCs. The SERCs will also undertake tariff fixation.

III. Central Electricity Regulatory Commission. Union Government will set up Central

Electricity Regulatory Commission (CERC). CERC will set the bulk tariff for all

central generating and transmission utilities. Licensing, planning and other related

functions could be delegated to CERC. All issues concerning interstate flows, and

exchange of power shall be decided by CERC.

IV. Rationalization of retail tariff: Determination of retail tariffs, including wheeling

charges etc. decided by SERCs which will ensure a minimum overall 3% rate of

return to each utility with immediate effect. Cross – Subsidization categories of

consumers may be allowed by SERCs. No sector shall however pay less than 50% of

average cost of supply. (Cost of generation, transmission and distribution). Tariff for

agriculture sector will not be less than 50 paisa per KWh to be brought to 50% of the

average cost, in not more than three years. Recommendations of SERC are

mandatory. If any deviation from tariffs recommended by it is made by a state / UT

Government, it will have to provide for the financial implications such deviations,

explicitly in the state budget. There will be incentives and disincentives to encourage

and facilitate the implications of the tariff rationalization by the state.

V. Private Sector participation: State Government agrees to a gradual programme of

Private Sector participation in distribution of electricity. The process of private

participation shall be initially in one or two viable geographical areas covering both

urban and rural areas in a state and the state may extend this to the other parts of the

state gradually.

VI. Cogeneration / Captive power plants: State Governments will encourage cogeneration

captive power plants. To facilitate the evacuation of power from these plants to the

grid, states shall formulate clear and transparent policy for purchase of power and

wheeling charges which provide fair returns to the co-generation / captive power

74

plants, captive power plants could also sell power to a group of industries as well as

other category consumers. Wheeling of power from a captive power plant to

consumers located at a distance or through displacement basis & shall be encouraged

and the states will issue clear and transparent long term policies in this regard”.

Electricity Law (Amendment) Act 1998: Section 27 (A) and (B) of the Indian Electricity Act

1910 was modified to set up Central and state transmission utilities. Transmission activity

was given an independent status. Powder Grid was designated the Central transmission utility

(CTUs) and the SEBs or their successors became state transmission utilities (STUs). The Act

stipulates that the CTU and STU are public companies. The CTU was given the

responsibility for interring state transmission of electricity and for all planning and co-

ordination of electricity dispatch.

Energy Conservation Act 2001: This Act visualizes the setting up of a Bureau of Energy

Efficiency to boost energy conservation activities such as implementation of standards and

labeling for electric appliances, audits or awareness campaigns.

The Central Electricity Regulatory Commission: (CERC): The CERC was established in

1998 under the Electricity Regulatory Commission Act 1998 with a mandate to promote

competition, efficiency, and economy in bulk power markets. It was also to improve the

quality of supply promote investments and advise the Government on the removal of

Institutional barriers.

The CERC is expected to carry out the following functions.

� Regulate the tariffs of generating companies owned and controlled by the Central Government.

� Regulate the tariffs of generating companies other than those owned or controlled by the Central Government if such companies plan to generate and sell electricity in more than one state.

� Regulate the interstate transmission of electricity including the tariffs of the transmission utilities.

� Aid and advise the Central Government in the formulation of a tariff policy which will be fair to consumers and which will facilitate the mobilization of adequate resources for the power sector.

� Cooperate with the environmental regulatory agencies to develop appropriate policies and procedures for environmental regulation of the power sector.

75

� Arbitrate, or adjudicate, disputes involving generating companies, or transmission utilities regarding tariffs.

� Pr0vides license for the construction, operation and maintenance of the interstate transmission system.

� Develop guidelines in matters relating to electricity tariffs.

Electricity Grid code Dec 1999:- The electricity grid code was designed by the CERC, to

improve the quality of electricity transmission in India, one of the primary goals being to

reduce the range of frequency and voltage the fluctuations. The code covers interstate

commercial exchanges and lays down the rules, guidelines and standards of management of

the power system in the most efficient and reliable manner.

The CTU, (Power Grid) a commercial public entity is responsible for the planning

maintenance and operation of interstate transmissions under the electricity law (Amendment)

Act 1998 power grid has the lead role in reviewing the grid code, modifications to the Grid

code must be approved by the CERC.

The Grid code defines the role of the RLDC’s, which have over all responsibilities for real-

time operation of the power system. Under the new code, RLDC’s may over role the

SLDC’s. The Grid Code also redefines the respective roles of REB’s and CEA in planning

and coordinating the grid development.

State electricity regulatory commissions (SERC):-

Establishment of State Electricity Regulatory Commission (SERCs) is envisaged in the

Electricity Regulatory Commission Act 1998 which gives power to the state Governments to

establish them if they are considered appropriate. (Section17 (1) of the Act).

The main functions of the SERC would be

� To determine the tariffs for electricity (wholesale, bulk, grid and retail). � To determine the tariffs for use of the transmission facilities. � To regulate the power purchase and the procurement process for transmission and

distribution utilities. � To promote competition, efficiency and economy in the electricity industry.

3.6 ELECTRITY ACT 2003:

Prior to the passing of this Act8, India primarily adopted a ‘Single User’ model, where in all

electricity was sold to the SEBs and from there on to the final consumers. How ever given

76

the poor performance of the SEBs, discrete attempts were made by the Government of India

towards their privatization. The primary examples being the Orissa SEB and the Delhi

Vidyuth Board. But Privatization alone didn’t seem to be paying rich dividends. In the

absence of either regulation or competition, whatever gains privatization has to offer may

never reach the common people. The experience of IPP scandals till date has shown that at

least the first wave of power sector reforms, namely issuing power purchase contracts to

investors to increase capacity has been a costly proposition.

Hence it seems Government of India realised that the success of Electricity Reforms in India

will critically depend up on some sort of restraining or disciplining mechanism in the sector.

In the absence of which current efforts will likely result in transition from inefficient public

ownership to profit giving monopolies or oligarchies. Such a mechanism could be strong,

independent and effective regulatory oversight over public or private monopolies or

significant competition among a large number of public and private entities (Chart 3.2)

The Act is an attempt to implement both the above mechanisms simultaneously through

vertical disintegration and deregulation, unbundling of the electricity utility into generation,

transmission and distribution and subsequent opening up of the sector to private players.

CHART 3.2 A SNAPSHOT OF THE MODEL, INDIA TRYING TO IMPLEMENT:

Source: Harsh Agarwal, “Opportunities and Threats-The Electricity Act 2003.” IIM Bbagalore P.2

Enactment of Electricity Act 2003 during the 10th Plan (2002-2007) was an important step

towards reforms in the power sector.9 Objectives of the Act are to be “to consolidate the laws

related to generation, transmission, distribution, trading and use of electricity and taking

77

measures conducive for the development of electrical industry. Protecting interests of

consumers and supply electricity to all areas, rationalization of electricity tariffs, ensuring

transparent policies regarding subsidies, promotion of efficient environmentally benign

policies, and constitution of regulatory commissions and establishment of Appellate Tribunal

for matters connected for incidental there to.

The Electricity Act 2003 has repealed all the previous Acts relating to electricity and has

paved the way for providing greater clarity to all stake holders including the regulators as

well as the judicial system. The Act provides comprehensive, yet flexible legislative frame

work that ensures power development and at the same time enables the sector to move

towards competitive market scenario. Competition with regulatory oversight is the cardinal

principle around which the entire Act is woven. Competition to encourage efficiency in

performance and regulatory oversight to protect the interests of all the stake holders, with

special emphasis on protecting the consumers and ensuring recovery of costs for the

investors.

3.6.1Salient features of Electricity Act 2003:10

1) Generation has been dilicensed and captive generation is being freely encouraged and

permitted. For hydro projects an approval of the State Government and clearance

from the Central Electricity Authority (CEA) are needed to check the safety aspects,

and optimum utilisaiton of water resources.

2) There will be Government owned Transmission utility at the Central as well as the

State level, having the responsibility of ensuring that the transmission network is

developed in a planned and co-ordinate manner to meet the requirement of the sector.

The load dispatch function can be integrated with or separated from the Transmission

utility and in either case; it will remain under Government Control.

3) Provision for Private transmission licensees has been made in this Act.

4) Open access in transmission with provision of surcharge for cross subsidy, and this

surcharge will be gradually phased out.

5) Distribution licensees are free to undertake generation and generating companies are

free to take up distribution.

78

6) For Rural and remote areas, stand alone systems for generation and distribution

would be permitted. This provision seems to be aimed at encouraging captive power

plants (CPPs) and Distributed Generation (DG).

7) For Rural areas decentralized management of distribution through Panchayaths, Co-

operatives, etc would be permitted.

8) Regulatory commissions are authorized to issue a license for power trading and they

will fix up the upper limit on power trading margins.

9) If there is directly commercial agreement between a consumer and generating

company or trader, the price of power would not be regulated and only the

transmission and wheeling charges with surcharge would be regulated.

10) State Governments can convert State Electricity Boards into companies or continue

them as distribution licensees.

11) An Appellate Tribunal has been created for disposal of appeals against the decision of

the CERC and SERC, so that there is speedy disposal of such matters. The SERC is a

mandatory requirement.

Exhibit 3.2 shows the institutional framework of power sector after reforms.

3.7 INDIAN REGIONAL ELECTRICITY SYSTEM11.

At Regional level,

� There are five Regional load Dispatch Centers and National Load Dispatch centre operated by CTU.

� A number of Inter State Generators (ISGS) � Power transmission between states and regions will be carried out by CTU.

At State Level :

� States are responsible for generation, transmission and distribution of power within the states.

� State load Dispatch centre will effectively monitor and control the power flow within the state.

� States purchase power from ISGS under long term PPAs. � Power trading between the states will be either direct or facilitated by trading firms.

79

EXHIBIT3.2

INSTITUTIONAL FRAME WORK (AFTER REFORMS)

FUNCTION CENTRAL LEVEL STATE LEVEL

Policy Ministry of Power (Central Electricity Authority)

Department of Energy

Regulation

Central Electricity Regulatory Commission (National Grid Code, interstate transmission and sale of power including tariff)

State Electricity Regulatory commission (Intra State transmission and sale of power, including distribution tariff for final consumer)

Generation Central sector undertakings (Thermal, Hydel and Nuclear)

State Electricity Board (SEBs)

Govt. Owned GENCO

Private Genco (IPPS)

Transmission Central Transmission utility (Power Grid corporation of India Limited)

State Transmission utilities (Govt. Owned Transco)

Distribution - Govt. owned DISCOMS

Private DISCOMS

Source : India Policy Forum 2007. The power sector in India. "An Inquiry into the Efficiency of the Reform

process" Saugata Bhattacharya, UTI Bank Ltd., Urjit R. Patel, Brookings Institution. July 2007. brookings

Institution – NCAER India Polocy Forum Fourth Conference 2007, P.66 .

80

Table 3.9 shows the status power position, which shows all the states are running with deficit

of power except the states of Himachal Pradesh and Rajasthan in Northern Region...

TABLE 3.9

PEAK DEMAND AND DEFICIT (Year 2009-10)

State Peak demand Peak met (MW) Surplus/Deficit (MW) Surplus/Deficit (%)

Chandigarh 308 308 0 0

Delhi 4,502 4408 -94 -2.1

Haryana 6133 5678 -455 -7.4

Himachal Pradesh 1118 1158 40 3.6

Jammu & Kashmir 2247 1521 -726 -32.3

Punjab 9786 7407 -2379 -24.3

Rajasthan 6859 6859 0 0

Uttar Pradesh 10856 8563 -2293 -21.1

Uttaranchal 1397 1313 -84 -6.0

Northern Region 37159 31439 -5720 -15.4

Chattisgarh 2819 2703 -116 -4.1

Gujarat 10406 9515 -891 -8.6

Madhya Pradesh 7490 6415 -1075 -14.4

Maharashtra 19388 14664 -4724 -24.4

Daman & Diu (*) 467 437 -30 -6.4

Dadar Nagar Haveli (*)

529 494 -35 -6.6

Goa 476 453 -23 -4.8

Western Region 39609 32586 -7023 -17.7

Andhra Pradesh 12135 10880 -1255 -10.3

Karnataka 7927 7084 -843 -10.6

Kerala 3199 2982 -217 -6.8

Tamil Nadu 10656 9813 -843 -7.9

Pondicherry 325 294 -31 -9.5

Lakshadweep # 6 6 0 0

Southern Region 32082 29053 -3029 -9.4

Bihar 2249 1509 -740 -32.9

Damodar Valley Corporation

2191 1908 -283 -12.9

Jharkhand 1088 947 -141 -13.0

Orissa 3491 3242 -249 -7.1

West Bengal 5850 5840 -10 -0.2

Sikkim 96 94 -2 -2.1

Andaman – Nicobar # 40 32 -8 -20.0

Eastern Region 13963 12885 -1078 -7.7

Arunachal Pradesh 95 78 -17 -17.9

Assam 920 874 -46 -5.0

Manipur 111 99 -12 -10.8

Meghalaya 280 250 -30 -10.7

Mizoram 70 64 -6 -8.6

Nagaland 100 96 -4 -4.0

Tripura 176 173 -3 -1.7

North – Eastern Region

1760 1445 -315 -17.9

All India 118472 102725 -15747 -13.3

Source : www.cea.nic.in l

81

Transmission and Distribution losses in different states from 2001-02 to 2008-09 are shown in Table

3.10. There is maximum reduction in losses in Delhi Vidyuth Board of the order of 22.78% (45% in

2001-02 to 22.22% in 2008-09), where reforms were introduced.

TABLE 3.10

TRANSMISSION AND DISTRIBUTION LOSSES(%)

S.No Name of

the State

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

Increase/

Decreases

losses

1

Andhra Pradesh

(APTRAN SCO)

29.6 26.13 23.15 22.55 20.21 19.82 19.19 18.63 -10.97

2 Assam 30.7 38.3 39.31 51.76 40.34 38.69 38.6 37.59 6.89

3 Bihar 24.7 37.98 36.66 38.88 43.96 50.67 48.79 46.37 21.67

4 Delhi

(DVB) 45 45.82 43.66 45.4 42.22 33 28.65 22.22 -22.78

5 Gujarat 19.2 28.52 24.2 30.43 27.91 24.87 26.13 24.07 -4.87

6 Haryana 33 37.65 32.07 32.11 30.51 33.35 32.83 30.74 -2.26

7 Himachal Pradesh

17.4 21.16 22.76 28.9 23.54 19.77 16.98 15.51 -1.89

8 Jammu & Kashmir

46.8 45.55 45.54 41.08 44.93 51.98 55.71 58.02 11.22

9 Karnataka KPTCL)

36 24.57 23.29 26.08 29.77 25.91 18.87 17.03 -18.97

10 Kerala 17.2 27.45 21.63 22.48 23.5 19.11 17.81 13.16 -4.04

11 Madhya Pradesh

30 43.31 41.44 41.3 40.07 39.24 35.64 38.46 8.46

12 Maharashtra 28 34.01 34.12 32.4 31.6 31.64 29.79 23.88 -4.12

13 Meghalaya 20.3 21.92 16.73 28.35 40.19 35.34 37.62 37.45 17.15

14 Orissa

(GRIDCO) NA 45.36 57.09 44.02 45.56 40.86 39.44 42.65 -

15 Punjab 17.5 24.42 25.96 25.42 27.56 26.61 22.82 23.08 5.58

16 Rajasthan (Transco)

27.7 42.61 43.74 44.68 39.92 35.6 34.71 31.47 3.77

17 Tamil Nadu

16.3 17.31 17.16 19.28 18.66 19.54 18.71 18.14 1.84

18 Uttar

Pradesh 38.7 34.16 35.17 34.39 32.63 33.49 28.6 30.94 -7.76

19 West

Bengal 30 25.93 31.01 28.54 24.84 23.64 21.29 16.79 -13.21

All India 27.8 32.54 32.53 31.25 30.42 28.65 27.2 25.47 -2.33

Source :"Annual Report on working of Electricity Boards and ED's "by All India Electricity Statistics General

Review 2010 (Transformation, Transmission & Distribution losses and Energy unaccounted)

82

3.8 POWER SECTOR REFORMS IN AP

Formation of Andhra Pradesh State Electricity Board (APSEB) in 1959 was a mile stone in

the development of power sector in the state12 It would be interesting to know the status of

power sector prior to the formation of APSEB. Madras State Electricity Department was

looking after the power sector, of the composite Madras State until the formation of the state

of Andrha in 1953.

MSED functioned through six operation systems, Dykara, Mettur, papanasanam (all these

three fed by hydro power), Madras (fed by thermal station at Basin Bridge and Villuvakkam

Thermal Station).

Andhra (Comprising the areas served by the thermal stations at Vijayawada, Visakapatnam,

Kakinada and other small diesel stations) and Rayala Seema served by power purchased from

its Jog Hydro Electric Scheme, the thermal stations at Nellore, the diesel stations at Kurnool,

Kadapa, Anantapur, Nandyal, Tadipatri, Proddatur, and Hindupur (fed from Siva Samudram

of Mysore).There were Two generating circles one with Head Quarters at Erode, incharge of

the four hydro and one thermal stations at Samayanallur and other with Head quarters at

Madras, inchrarge of the Basin Bridge power house and Madras plant extension.There were

43 licensee under takings supplying power to consumers, of which 9 were managed by the

local government authority and the rest by Private Licensees.

Andhra Pradesh Electricity Department was formed on October 1, 1953, the day on which

Andhra State was formed with Kurnool as capital. Andhra State has an area of over 63000

square miles which is about 5.2 percent of India and a population of over three crores which

was about 6 percent of the then population of India. Andhra State had 15 percent of Indies

water resources but was industrially backward.

The Andhra Electricity Grid consisted of 3 Nos thermal stations, Visakapatnam, Vijayawada

and Nellore, with an aggregate capacity of 24,000 KW and 13 diesel Stations at the following

places.

(i) Srikakulam (ii) Visakapatnam (iii) Kakinada (iv) Rajamundry (v) Vijayawada

83

(vi) Madanapalle (vii) Kadapa (viii) Proddatur (ix) Tadipatri (x) Anantapur (xi) Nandyal (xii) Kurnool (xiii) Hindupur

The aggregate capacity was 11,000 KW of which bulk supply of hydropower was received

from two neighboring states, about 2000 KW from Mysore, Jog power at Ballary about 3,400

KW of Madras Mettur power in the Chittor district at Kuppam, Chittoor, Nagari and four

other points and 700 KW from Mysore Siva Samudram Power at Hindupur. There were two

operating systems.

i) The Andhra Power System, Comprising the districts of Srikakulam, Visakapatnam, East Godavari, West Godavari, Krishna and Guntur.

ii) The Rayala Seema Power System Comprising the district of Nellore, Chittor, Anantapur, Kadapa and Kurnool.

There were 12 licensee under takings supplying power to the consumers of these 9 were

managed by Private companies, 2 were managed by local bodies, and one was under the

control of Tirumala Tirupati Devasthanam.

The percapita consumption of Andhra State was 5 units. (Much less than the National

average of 14 units). The consumption in Andhra was about half that of the composite

Madras State. The total number of consumer at the end of 1953-54 in the state was 53,839 of

these 35,194 were directly served by electricity department and 18,645 by licensees

distributing government power.

3.8.1 Telangana Scenario:

The first place to get Electricity in Hyderabad was, of course, the palace of Nizam in 1909.

Hyderabad Electricity department was established in 1912. The Hussain Sagar bund was

electrified in October 1913. Street electrification work in and around Hyderabad was started

in the same month. By December 1915, electricity was provided on Residency roads. At

about the same time, the programme of expansion was taken up to generate electric power at

Aurangabad, Nanded (Now is Maharastra), Raichur, Gulbarga (Now in Karnataka).

Nizamabad and Warangal.

84

The details of electricity system in Nizam state to the end of world war-I is as follows.

Main and feeder lines : 12 nos. Sub stations : 50 nos. Total Consumer : 3,238 Nos.

The Hyderabad Electricity Act came into being in 1938-39. By this time Hyderabad could

claim to be one of the best illuminated cities of India, though other parts of the state were not

that fortunate. The first outdoor substation was constructed at Tolichowki. The first Hydro

electric project in Hyderabad State built at a cost of Rs. 225 lakhs and was inaugurated on

January 27, 1955 at Nizam Sagar, 110 miles from the state capital. This project constituted

the first phase of the power development of the Manjira River, a tributary of river Godavari.

It provided 15000 KW of electricity to supplement the power supply to the twin cities of

Hyderabad and secunderabad.

Till then the twin cities were getting power from Hussain Sagar thermal station. The

Azamabad Thermal power station also known as Ramagundam Thermal Power Station and

Godavari Valley Thermal Power Station which was built in 1953-56 first envisaged a steam

power station of 37,500 KW capacities at Ramagundam in Karimnagar district.

During this time the consumers in Telangana Region were supplied power mainly from

diesel power stations. There were about 95 diesel power stations in Telangana region with

aggregate capacity of about 1500 KW. These were located at Ibrahimpatnam, Gajwel, Sanga

Reddy, Jogipet, Sankarapalli, Vikarabad, Sadasivapet, Zaheerabad, Aligoal, Narayanapet,

Gadwal, Devarakonda, Maktal, Kodangal, Tandur, Shadnagar, Parigi, Nizamabad, Armoor,

Banswada, Bodhan, Kamareddy, Jagityal, metpalli, Sircilla, parkal, Mulugu, Narsampet,

Janagaon, Nalgonda, Khammam, Suryapet, Miryalaguda, Mahaboobabad,Medchal,

Adilabad, Nirmal, Utnoor etc.

3.8.2Formation of Andhra Pradesh State Electricity Board (APSEB):

Andhra Pradesh State Electricity Board was constituted on 01-04-1959 as per the order of

Government of Andhra Pradesh Go.Ms. No. 722 PW at 30.03.1959 with R. Prasad ICS,

Secretary to the Govt. of AP as Chairman (ex officio). In the first year APSEB functioned

through 4 operation circles. The jurisdiction of these circles was.

1. Visakapatnam Circle : Srikakulam, Visakapatnam and East Godavari Districts. 2. Vijayawada Circle : West Godavari, Krishna, Guntur and Nellore district

85

3. Anantapur Circle : Kadapa, Kurnool, Chittor and Anantapur districts. 4. Hyderabad circle : Entire Telanga region.

Out of 10 private electrical undertaking, supplying power to consumers, three were

nationalized during 1959-60 and the rest of seven undertakings were nationalized in the sub

sequent year.

Strides in Power Generation:

The state of power generation in AP at the time of its formation was very humble.

The total installed capacity: 99 MW (most of it was hydal) (At the time of formation)

There were no big thermal or gas based power stations at that time only hydal and diesel

based stations were order of the day. As the production of power by diesel stations became

prohibition ally expensive, the stations based on diesel were closed one after the other.

Machkand station can be described as the oldest power utility in the state. It was launched in

the first five year plan and expanded during the second five year plan. The first unit of 17

MW was commissioned on August 19, 1955. The sixth and the last unit of 23 MW was

launched on August 8, 1959.

Of the 120 MW produced by the Machkund and Hydal Complex, Andhra Pradesh gets a

share of 84 MW. First unit of 5 MW at Nizam Sagar Commissioned in 1956 and Second unit

of 5 MW in 1957. On the Tungabhadra two units of 9 MW each were set up. Hanpi Station

has also two units of 9 MW each.

Diesel stations were also set up at Erragadda, Hussain Sager, and GTS Colony in Hyderabad.

Electricity was supplied to 95 towns. The entire substations were of 33 KV and below. 133

habitations adjoining big villages were electrified.

Total no. of consumers in those days were 74,695. Agricultural connections: 3996

High Tension (HT) consumers are as good as not there. Distribution lines were to the tune of

8335 circuit KMs. (CKM). The total number of employees was 7245 nos. per capita

consumption of electricity was 8 units. Annual income from the sector was 3.1 crores. Total

production in 1956 was 99 MW.

86

Transmission Network:

� A 66 KV system was introduced in 1955 with the commissioning of 116 CKM of Machkund – Simhachalam line.

� The 66 KV systems were upgraded to 132 KV in 1962. � 220 KV system was introduced in 1966 with the commissioning of 211 CKM of 220

KV KTS Nagarjuna Sagar line (Vijayapuri North)and 220 / 132 KV Substation at Nagarjuna Sagar

400 KV systems was introduced in 2000 with the commissioning of 46 CKM of 400 KV Mamidipally- Ghanapur line and 400 / 220 KV sub-station at Mamidipalli. Progress in Distribution Network.

33 KV system. � 548 CKM of 33 KV line was existing as on November 1st, 1956. � No of 33/11KV substation are 85 as on 1st Nov., 1956. � 3363 CKM of 11KV and LT line was existing as on November, 1956. � No. of Services as on Oct. 1st 1956 were 74,695 � No. of Agricultural services were 3,996.

Andhra Pradesh has witnessed a significant growth13 and development in the power sector

during the past five decades. APSEB, which was formed in 1959, was responsible for

generation, transmission and distribution of electrical power in the state and over all

development of power sector in general. The state had 7276 MW installed generating

capacity as on 31.03.1998 (before reforms) third highest among all the states in the country.

APSEB persistently served over 10 million customers including about 1.8 million agriculture

consumers up from mere 0.2 million in 1960. Energy availability increased from about 800

GWh. in 1960 to about 36,000 GWh in 1998. Indeed there has been impressive growth, with

APSEB fulfilling to a large extent its role and responsibilities.

However, power sector in 1990s faced severe problems and challenges. The growth in the

installed capacity has not been in commensurate with the demand for power and therefore

shortage both in terms of energy and peak demand was prevailed necessitating restrictions

and power cuts. Energy shortages have increased from about 5% in 1988 to 13% in 1998.

The transmission and distribution system was overloaded and was beset with problems of

high line losses, poor voltages, and reliability. The credit worthiness of APSEB was also

deteriorated due to its poor financial performance and growing losses, thus causing increased

burden on the state’s budget. The accumulated losses of APSEB as on 31st March, 1998 were

estimated to be Rs. 39 billion (excluding revenue subsidy from the Government). The poor

87

financial viability was standing in the way of revamping and augmenting the power system

and brings in new capital investment to meet the developmental needs for the power sector.

Consequent on the liberalized policy announced by the Government of India14, the state

government has taken steps towards promoting private generating stations with State

Government guarantees. The Government have constituted a high level committee with a

chairman and five members in G.O. Ms. No. 2, Energy & Forests (power – 1) Department,

dated : 7 –1-1995 to provide guide lines and appropriate recommendations to Government on

the issues of Private investment in power sector, restructuring of power sector and a tariff

policy. The summary of recommendations of the committee was as follows:

1. To meet the supply demand gap, in the immediate/short term, following steps to be taken.

a. Large consumers may be permitted to take up captive generation plants. Improvement in the plant availability, and plant load-factor in the existing generating units.

b. Reduction of system losses

c. Since there may be delays in the completion of projects on hand by the private generators, APSEB may purchase power from private generators, to fill the gap.

2. During the tenth plan period (2002-2007) and beyond new generation capacity would be almost entirely by Independent power producers (IPPs). The IPPs will enter into power purchase agreements directly with Zonal Distribution Companies, (ZDCs).

3. Investments in power sector should be treated as investment in any other industry.

4. APSEB should be restructured on functional basis by creating wholly owned subsidiaries viz.,

a. Andhra Pradesh Power Corporation (APPC)

b. Andhra Pradesh Transmission Corporation (APTC)

c. Zonal Distribution Companies

5. APSEB, the residuary body, could function like a holding company and plan the following functions.

a. Plan and over see the total power development in the state.

b. Publish, forecast of demand and the outlines of plan projections at preferred sites.

c. Advice the Government as required on all power related matters.

d. Over see the working of the subsidiaries

e. Over see the implementation of restructuring and privatization process

in distribution, till it is complete.

88

6. Tariff policy should promote the development of the sector, encourage the inflow of resources and increased efficiency in the supply and consumption of electricity tariffs which are too low will lead to wasteful consumption.

7. An autonomous, judicial regulatory commission should be set up through suitable legislation urgently, in any case before the induction of the private sector into the Zonal Distribution Companies.

3.9 OVERVIEW OF AP POWER SECTOR BEFORE REFORMS

3.6.1 Installed Capacity and Generation

During the last four decades i.e. from 1960 to 1998, there has been a significant growth in the

state power sector, (Refer Table 3.10). The installed generation capacity available to the state

has grown from about 213 MW in FY 1960 to7276 MW in FY 1998, registering a

compounded average annual growth rate (CAGR) of about 10%. The share of power

purchase in total energy available for sale has increased significantly overtime, from 104

(GWh) (1.7%) in FY 1980 to 11.881 GWh (33% in FY 1998. comprising 67% from the state

sector, 20% from the central generating stations 2.5% from other states, 3.5% from joint

sector projects and about 7% from the private sector.

The length of transmission lines (220 KV and 132KV) of APSEB has increased six fold from

about 3000 CKM in FY 1960 to 18000 CKM in FY 1998. The number of 220 KV and

132 KV Substations have increased from 27 in FY 1970 to over 200 in FY 1998. The

number of distribution transformers have also been increased at faster rate, in 1998

APSEB had 0.16 million distribution transformers with an aggregate 12000 MVA

capacity up from mere 12,000 transformers in FY 1970.(.Table 3.11)

3.6.2 Electricity Demand and Supply Widening Gap:

Despite the significant physical growth of the power sector APSEB has found it

increasingly difficult to meet the demand of the state for adequate and reliable supply

of electricity. The widening gap of availability and requirement of Energy in GWh and

peak demand in MW from 1991 to 1998 is shown in Table 3.12

89

TABLE 3.11

ANDHRA PRADESH’S POWER SECTOR: FY 1960 – FY 1998 S.No. Description FY 1960 FY 1970 FY 1980 FY 1990 FY 1998 (Provisional)

1 Installed capacity (MW)

State sector 213 615 1888 3825 5612

Share from central sector - - - 717 897

Joint sector - - - - 272.5

Private sector - - - - 495

Total : 213 615 1888 4542 7276

2 Energy available (GWh)

State sector 784 2305 6091 14295 24476

Purchases from central sector

- - - 3550 7321

Purchases from other states

104 472 911

Joint sector - - - - 1230

Private sector and captive - - - 25 2419

Total energy available 784 2305 6195 18342 36357

3 Length of T&D Lines

220-KV (CKM) - 891 2428 4784 7827

132-KV (CKM) - 2243 4231 7388 10331

66-KV-km - 2493 2623 1570 272

33-KV-km 2833 5719 10188 18810 25850

11-KV-km 11918 28723 62427 117460 156730

L.T. lines-km 13738 41724 107614 266110 405240

Total length of lines – (km)

28489 81798 189511 416122 606250

4 No. of distribution transformers

4667 12363 34701 80419 159151

5 No. of consumers (‘000) 270 827 2382 6187 10071

6 No. of electrical pump sets energized (‘000)

17.9 156.5 388.3 111 1736

7 Connected load (MW) - - 4483 9567 16396

8 Per capita consumption (KWh)

19 44 96 238 460

9 Energy sales (GWh) 601 1921 4552 14590 23642

10 Energy sales (%)

Domestic - 7.36 10.94 13.21 19.18

Commercial - 5.95 4.80 3.06 3.92

Industry L.T. - 6.28 8.45 5.96 5.74

S.No. Description FY 1960 FY 1970 FY 1980 FY 1990 FY 1998

(Provisional)

Industry H.T. - 61.49 48.11 34.58 22.89

Agriculture - 17.10 20.11 36.41 39.48

Other** - 1.82 7.59 6.78 8.79

Source : Andhra Pradeh Power Sector reform and Restructuring program. Program and project implementation

plan. Volume – 1,Chapter 2,p.2In APSEB as on 1998 there were more than 10 million consumers, up from mere

0.3 million consumer at its inception.The connected load of APSEB has increased from about 2800 MW in FY

1975 to 16,396 MW in FY 1998.

**Other include Cottage Industry, Public Lighting, General Purpose and temporary under L.T

Category all other categories except Industry Cat-I, II and III under H.T.

90

TABLE 3.12

ELECTRICITY DEMAND SUPPLY GAP Energy (GWh) Peak Demand (MW)

Year Available Required* Deficit/

Surplus

Deficit /

Surplus (%) Available

Peak Demand

Deficit /Surplus

Deficit/

Surplus (%)

FY91 20133 21863 -1730 -7.91 3257 3693 -436 -11.81

FY92 22549 24225 -1676 -6.92 3481 4062 -581 -14.30

FY 93 23998 25949 -1951 -7.52 3681 4468 -787 -17.61

FY 64 26522 28544 -2022 -7.08 3920 4915 -995 -20.24

FY 95 28520 31398 -2878 -9.17 4168 5407 -1239 -22.91

FY 96 29016 34538 -5522 -15.99 4301 5947 -1646 -27.68

FY 97 32059 37992 -5933 -15.62 4721 6542 -1821 -27.84

FY 98 36357 41791 -5433 -13.00 5474 7196 -1722 -23.92

Source : Andhra Pradeh Power Sector reform and Restructuring program. Program and project

implementation plan. Volume – 1, Chapter 2, p.4

*The demand and energy forecast is based on the recommendations of High Level Committee

at 10% growth rate which was obtained in no power out period of FY 1975 to FY 1986. The

projections are made with FY 1986 as the base year.

91

3.6.3 APSEBs Financial Performance

The financial performance of the APSEB has steadily deteriorated since FY 1995 and the

Board has relied on State government Subsidies to achieve 3% rate of return on the net fixed

assets, as stipulated order section 59 of the Electricity (supply) Act 1948. The strain on the

financial performance of the Board may be attributed primarily to the inability of the Board

to function as an independent commercial entity, while on one hand the cost of power

generation and supply has increased at faster pace, the tariff adjustments on the other hand

have not been commensurate. Due to the socio political considerations, tariff adjustments

have neither regular nor have been adequate to cover the cost of supply. Table 3.13 shows

the details of revenue surplus/deficit

3.6.4 Electricity Tariff:

One of the main reasons for the deterioration in the financial performance of APSEB along

with althea SEBs of the country has been the fact that electricity tariffs of APSEB have not

been able to recover its average cost of power supply. Tariff revisions are not regular and nor

are adequate to recover the cost of supply. Since August 1996, there has been no further tariff

revision. In FY 1998, while the average cost of generation and supply by APSEB was Rs.

2.30 / KWh, the average per unit tariff was only Rs. 1.66 / KWh Table 3.14. Shows the trend

in average unit cost of supply, average tariff and average per unit revenue realized (includes

revenue from sale of electricity and other non operating income) by APSEB. It is evident that

since FY 1995, the gap between average per unit revenue and cost of supply has increased

over the years.

The subsidised tariffs for the agriculture sector, rural co-operatives and domestic sector casts

heavy burden on the APSEBs financial performance. As is evident from Table 3.15, in FY

1997 out of total sales of 23945 GWh, by APSEB, about 15,080 GWh (i.e. about 63% of the

total sales was sold at subsidised rates. The extent of subsidy is the highest for the agriculture

sector, where the power is sold on the basis of flat rate based on the capacity of pump sets,

(Horse power) rather than, metered supply.

92

TABLE 3.13

REVENUE SURPLUS AND RATE OF RETURN OF APSEB

Year Surplus (-) deficit Rate of return on net

fixed assets (%)

Without

subsidy

Rs. In

million

With

subsidy

Rs.

In million

Without

subsidy

Rs. In

million

With

subsidy

Rs. In

million

1990-91 810 810 4.71 4.71

1991-92 844 844 3.74 3.74

1992-93 795 795 3.26 3.26

1993-94 870 870 3.19 3.19

1994-95 -8569 9441 -9.46 3.00

1995-96 -11285 12591 -25.92 3.00

1996-97 -7212 8503 -16.75 3.00

1997-98 -11344 12559 -28.24 3.00

Source : Andhra Pradeh Power Sector reform and Restructuring program.

Program and project implementation plan. Volume – 1, Chapter 2, p.10

93

Commercial and Industrial consumers are supplied Power at a rate higher than the average

cost of supply with the objective to cross subsidize agriculture and domestic consumers and

rural co-operatives. The high extent of cross subsidization has resulted in tariffs for

commercial and Industrial consumers in Andhra Pradesh being highest in the country. At the

existing tariff levels and the imposed demand restrictions, more and more industries were

found it economical to shift to captive generation.

3.6.5 Revenue Subsidy from State Government:

With the support of State Government by Revenue subsidy the Board would have been

comfortable financially, but non release of Revenue subsidy in cash and making adjustments

against equity / outstanding loans, led the Board to Serious cash crunch resulting a very high

outstanding liabilities both on operation side and to capital suppliers. The details of revenue

subsidy from the Government from 1994-95 to 1997-98 is given in Table 3.16.

94

TABLE 3.14

REVENUE AND COST OF SUPPLY

Year Average Cost of

Supply

(Rs/KWh)

Average Tariff

(Rs/KWh)

Average Revenue

(Rs/KWh)

FY 1991 0.75 0.74 0.78

FY 1992 0.86 0.84 0.87

FY 1993 0.96 0.94 1.00

FY 1994 1.09 0.99 1.08

FY 1995 1.36 0.93 0.99

FY 1996 1.58 0.97 1.04

FY 1997 2.03 1.56 1.69

FY 1998 2.30 1.66 1.82 Source :Andhra Pradeh Power Sector reform and Restructuring program.

Program and project implementation plan. Volume – 1, Chapter 2,p

95

TABLE 3.15

CROSS SUBSIDIZATION AMONG VARIOUS CONSUMER CATEGORIES

1996-97 1997-98

Average Cost of

Supply Rs.

/KWh

Rs. 2.03/KWh Rs. 2.30/KWh

Sales

GWh

Avg.

Tariff

Rs/KW

Subsidy

Rs/

KWh

Subsidy

Rs.

Million

Sales

GWh

Avg.

Tariff

Rs/KW

Subsidy

Rs/

KWh

Subsidy

Rs.

Million

I. Subsidized Categories

LT I Domestic Category

3801 1.43 0.60 2281 4535 1.66 0.64 2902

IV Cottage Industry

23 1.27 0.76 17 25 1.39 0.91 23

V Agricultural 7835 0.14 1.89 14808 9336 0.16 2.14 19979

VI Public Lighting

212 1.14 0.89 189 285 1.23 1.07 305

VII General purpose

86 2.14 0.16 1756

HT Rural Electric Society

Co-operative

606 0.05 1.98 1200 777 0.04 2.26 8

Irrigation 26 1.98 0.05 1 36 2.07 0.23

Colony lighting 104 2.00 0.03 3

Amount subsidized

12607 18499 15080

24987

II. Subsidizing Categories

LT II Commercial

795 3.28 1.25 994 927 3.69 1.39 1289

III Industrial 1270 2.88 0.85 1080 1358 3.31 1.01 1372

IV General Purpose

70 2.10 0.07 5

HT I Industrial 4409 3.31 1.28 5644 4266 3.69 1.39 5930

II Commercial 500 3.09 1.06 530 524 4.06 1.76 922

V Railway Traction

687 3.29 1.26 866 850 3.81 1.51 1284

VI Colony lighting

114 2.43 0.13 15

Amount subsidizing

7731 9119 8039 10812

Source : Andhra Pradeh Power Sector reform and Restructuring program. Program and project

implementation plan. Volume – 1,Chapter 2,p

96

TABLE 3.16

REVENUE SUBSIDY FROM STATE GOVERNMENT

Subsidy for

the year

Subsidy Rs.

Million Adjustment made Rs. million

Cash

subsidy

received by

APSEB

1994-95 9441 Equity Write off of adjustment 1995-

96 A/cs. 9441 Nil

1995-96 12591 Loan Write off Adjusted in 1996-97

A/cs. Comprising of 12591 Nil

a) Opening Balance as on

01-04-1995 7103

b) Repayable Loan sanctioned in

1995-96 2978

c) Normal Loan sanctioned in 1995-

96 2510

1996-97 8504 Loan Write off Adjusted in 1997-98

A/cs. Comprising of 8504 Nil

a) Opening Balance as on 1/4/97 5784

1997-98 12559 Yes to be sanctioned by State

Government - -

Sourc : Andhra Pradeh Power Sector reform and Restructuring program. Program and project

implementation plan. Volume – 1, Chapter 2,p.

97

3.6.6 APSEBs Liabilities:

The continued revenue deficit and non release of subsidy in cash by State Government have

led to large outstanding liabilities as dues to its suppliers of fuel, power purchase, repairs and

maintenance and to capital suppliers etc. The total outstanding liabilities during the period

FY 1996 to FY 1998 are detailed in Table 3.17.

TABLE 3.17

OUTSTANDING LIABILITIES OF APSEB

S.No. Details As on 31.3.96

(Rs. millions)

As on 31.3.97

(Rs. millions)

As on 31.3.98

(Rs. millions)

1 BHEL 745 822 14

2 Singareni Colleries 1123 1024 2167

3 Mahanadi Coal Fields 490 135 -

4 Railway Freight on Coal 125 54 440

5 Debt Repayment with interest 2853 5174 8692

6 Power Purchase (NTPC, NLC, NPC, MSEB, PGCIL etc.)

9082 9119 8116

7 Suppliers & Contractors including field payments

2947 1913 1723

8 Staff Payments 310 155 108

9 Customs Duty 456 477 446

10 Bank O.D. 2625 3005 4050

11 APGPCL 274 37 245

Total 21030 21915 26001 Source : Andhra Pradeh Power Sector reform and Restructuring program. Program and project

implementation plan. Volume – 1, Chapter 2,p

98

APSEB has significant amounts of unfounded related liabilities on employee terminal

benefits, especially towards pension and gratuity fund. Traditionally, APSEB has not kept the

employee contributions towards provident fund in separate trusts and has instead used this

amount in the business of execution of capital works. The liability on pension and gratuity

for the pensioners at the end of FY 1998 is estimated to be about Rs. 8806 million while that

on further retires is estimated at Rs. 3050 million respectively.

3.6.7 Government of Andhra Pradesh Support:

APSEB was traditionally depended on funds from Government of Andhra Pradesh for the

growth and development of the power sector. GoAP has been contributing large amounts in

the form of loan and revenue subsidy (to achieve 3% ROR) linked through state annual plans

and budgets year wise support of the Government during Eight plan is given in Table 3.18.

Table 3.19 shows the impact of the State’s Power sector on the state’s finances. APSEB has

been a drain on the state treasury, both in terms of direct funds flow and in terms of

foregoing by the Government of Andhra Pradesh by plugging back the electricity duty, other

dues and the debt servicing that it was entitled to on its funds.

99

TABLE 3.18

GO AP SUPPORT DURING EIGHTH PLAN

(Rs. in Crores)

1992-93 1993-94 1994-95 1995-96 1996-97

Total Plan Outlay 1660 1851 2130 3159 2990

Power Sector Outlay 533 550 639 699 585

% Share of the Power Sector 32.11% 29.71% 30.00% 22.13% 19.56

- Generation 338 331 448 501 452

- R & M 4 4 8 6 1

- T & D 168 193 160 160 132 Source : Andhra Pradeh Power Sector reform and Restructuring program. Program and project

implementation plan. Volume – 1, Chapter 2,p

100

TABLE 3.19

IMPACT OF POWER SECTOR ON STATE FINANCES

(Rs. in Millions)

Details FY 91 FY 92 FY 93 FY 94 FY 95 FY 96 FY 97

A. Receipts by GoAP (By Adjustment only)

Electricity duty 396 414 424 450 827 673 712

Interest 1034 1433 1657 1929 518 199 44

Repayment 30 49 51 231 - 587 24

Equity/Loans - 9441 12591

Water Royalty 290 188 185 187 208 173 154

Other Sales Tax 489 448

Singareni dues payble to govt.

389 136

Total - A 1750 2084 2317 2797 1553 11951 14109

B. Payments by GoAP

Loans Including External Aid

2709 2808 4401 5057 4633 5487 5473

Equity (By Adj. against loan)

9081 13571

Subsidy (Adj. against Equity/loan

- 9441 12591

Total – B 2709 2808 4410 5057 13714 28499 18064

Net impact on Govt. (B-A)

959 724 2084 2260 12161 16548 3955

C. Budgetary impact on GoAP for debt

service to GOI

56 441 993 1827 2723 3517 4469

Source : Andhra Pradeh Power Sector reform and Restructuring program. Program and project

implementation plan. Volume – 1, Chapter 2,p

101

3.7 RESTRUCTURING OF APSEB:

The Government of Andhra Pradesh (Go.AP)15 has decided to restructure it’s power sector

with the objectives of creating the conditions for the sustainable development of it’s power

sector through promoting competition, efficiency and transparency, attracting private finance

and improving the efficiency and quality of the electricity services in the state. The ultimate

goal of the reform process is to ensure that

i) Power will be supplied under the most efficient conditions in terms of cost and quality to support the economic development of the state.

ii) Power sector ceases to be a burden to the state’s budget and eventually becomes a net generator of financial resources.

Andhra Pradesh power sector reform programme of APSEB broadly involves:

i) The unbundling of the vertically integrated monopoly power utility (APSEB) and functional separation of generation, transmission and distribution into separate services to be provided by separate companies registered under the companies act.

ii) Development of the statutorily created independent and autonomous regulatory agency, and

iii) Private sector participation in generation, transmission, and distribution business.

In parallel, GoAP implemented an investment program of the order of about US $ 3875

(million long term investment programme) during the 10 years (FY 1999–FY 2008)

primarily to rehabilitate and expand the transmission and distribution system, to rehabilitate

generating facilities of APSEB, to promote end use energy efficiency and demand side

management measures and for capacity building in the new power sector entities. The world

bank has agreed to support GoAP’s efforts through financing a part of the investment

programme to the extent of up to US $ 1000 million, through a series of loans under its

“Adaptable Program Lending” (APL) “Department of Foreign Investment Development”

(DFID) UK and “Canadian International Development Agency” (CIDA), have committed to

support the reform programme by providing support for technical assistance to APSEB and

its successor entities in implementation of the reform programme. ‘Japan International Co-

operation Agency’ (JICA) has also expressed interest to provide support for technical

assistance. ‘Oversees Economic Co-Operation Fund’ (OECF), Japan in addition to its present

support in financing of pumped storage hydro electric project in Andhra Pradesh had

expressed interest to provide investment support for evacuation of power and upgrading the

power transmission system.

102

3.7.1 Reforms:

Policy statement16 by the State Government keeping in view the persistent demand – supply4

gap, and deleterious effects on the economic development of the state and due to the need to

distance state government from the power sector management and regulation, Government of

Andhra Pradesh formulated its Policy in February 1997 in regard to reform of the power

sector.

3.7.2 Restructuring: The compulsions17.

APSEB has become unwieldy 3rd largest electricity utility in the country Inefficiencies /

losses in one segment covered by better performances elsewhere cheap.( Hydel average cost

16 ps/unit, high tariff for industry, average cost 380 ps/unit compensating poor commercial

performance.

Expl: Billing: Hyderabad city billing only 60%.

� Trend all over the world to set up large number of small distribution companies

� Priorities getting distorted

� Being vertically integrated, compulsions arising out of day to day financial exigencies coming in the way of long term investments. Expl. Board unable to invest adequately in rationalization and modernization of even its most profitable Hydel Plants.

� APSEB incurring huge deficits outstanding to the tune of Rs. 2300 crores.

� Unable to invest in modernization of its vast transmission and distribution network.

� Government unable to provide required funds as investment needs in T&D alone are to the tune of 18,000 crores.

� Levels of funding required are beyond capabilities of most Indian Financial Institutions.

� National / International leaders insisting on restructuring as a precondition for financing

� This is based upon International experience – utilities the world over are getting unbundled.

� Even well run private but vertically integrated utilities in US being unbundled by Federal Law.

Benefits of Reforms18

� Tariff will be fixed by tariff Regulator Considering costs of generation, transmission and distribution, welfare policies of Government, views of all the sections of consumers/utilities, degree of crosssubsidisation sustainable, minimum efficiency standards of utilities.

� Transparency in functioning of power sectors

103

� Actual cost of generation transmission and distribution will be reflected through establishment of ‘buyer-seller’ relationship

� Inefficiencies in individual sectors get exposed on account of public scrutiny. � Subsidies to selected consumers / sectors will have to be provided by way of explicit

budgetary support. This will ensure commercial operation and there by survival and growth of sector.

� Consumers will benefit by way of better services and power at reasonable prices, consequent upon utilities functioning under market conditions and resultant competition.

� Consumers will be heard while fixing tariff, licensing etc., leading to empowerment of consumer.

� Imbalances / inefficiencies will get localized and show up immediately, thereby permitting timely intervention / policy correction.

� Will enable quick rising of funds as Financial Institutions are willing to fund successor utilities after reform.

� Market mechanism will eventually lead to establishment of IPPs without rigorous guarantees, PPAs etc

� Will result in attracting new Industries in view of healthy power sector and ample availability of power.

� Increased consumption by industry would enable higher cross subsidization of other sectors leading to lower prices to the bulk of small consumers.

3.7.3 The broad objectives of reform are:

i) Providing operational, managerial and functional autonomy to APSEB/other successor utilities to enable it / them to operate along commercial lines.

ii) Separating the policy and regulatory functions from the management functions of the power sector.

iii) Ensuring that while Government may continue to direct and determine the overall policy framework for the power sector, as a whole, it withdraws from regulatory function

iv) The establishment of a regulatory framework to enable rational tariff formulation that would ensure cost optimization with securing operational efficiencies in generation, transmission and distribution of energy and collection of related revenues and also to provide incentives for energy conservation and disincentives that discourages growth in wasteful use of energy.

v) Promoting investing participation of the private sector in the power industry. vi) Removing dependence of electricity utilities on government budgetary assistance for

achieving prescribed statutory financial return.

3.8 REGULATORY MECHANISM:

The regulatory mechanism is defined by19. 1.AP Electricity Reform Act 1998 2.AP Electricity Regulatory Commission

104

3.8.1 ANDHRA PRADESH ELECTRICITY REFORMS ACT 1998:

The Andhra Pradesh Electricity Reform Act which was enacted in 1998 provided for the

constitution of Electricity Regulatory Commission, Restructuring of Electricity industry,

rationalization of generation, transmission, distribution and supply of electricity, avenue for

participation of private sector in the electricity industry and generally for taking measures

conducive to the development and management of the Electricity Industry, in an efficient,

economic and competitive manner. Enactment of the Andhra Pradesh Electricity Reforms

Act of 1998 is an important event and instrument in the reforms in the AP. This can be

surmised from the speed at which this Act to restructure APSEB was passed in the AP

Legislative Assembly, stunning many an observer. Government introduced the Bill on April

27, 1998 and the same sailed through all the motions in one day and it was passed on April

28, 1998. In order to facilitate smooth passing of the bill the entire opposition was suspended

from the Assembly. Police were called to quell the protests by the Board’s employees. This

passing of the bill along with other measures taken by the AP Government impressed the

World Bank so much, that sanctions in the wake of nuclear explosions conducted by India in

May 1998 at Pokhran have not come in the way of sanctioning new loan worth Rs. 2200

crores to AP Government under Andhra Pradesh Economic Restructuring Project and $ 1

billion (Rs. 4400 crores) loan for Andhra Pradesh power sector restructuring programme.

3.9 PHASED APPOROACH OF IMPLEMENTATION OF REFORMS:

Govt. of AP proposed to implement the reform programme in a phased manner20, over a 10

year time period (FY 1998 – FY 2007) with the involvement and participation of the various

stake holders. In view of the technical complexity and sensitivity of reform program, the

phased approach of the reform program is aimed to demonstrate the benefits of the reforms at

every step and there by ensure the irreversibility of the process. The proposed phases of the

implementation of the reform programme in phased manner are described below.

3.9.1 The initial phase (1998-2000): The reform programe will set the legal regulatory and

structural stage for the reform. The enactment of Andhra Pradesh State Electricity Reform

Bill, establishment of Andhra Pradesh Electricity Regulatory Commission (APERC), setting

up of the new power corporations. Initiation of privatization of the distribution business and

financial restructuring of this sector will be some of the major steps undertaken during the

105

first phase. The initial phase of the reform programme is surely the most critical phase in

terms of building the confidence of various stake holders by demonstrating the progress in

implementing the reform and investment programme.

3.9.2 The second phase (200-2002): l focused on privatization of distribution business,

achievement of financial sustainability of the sector, institutional development of the new

entities and improvement in the system efficiency and quality of power. In this phase the

rehabilitation and system improvement programme was taken up to remove the system

constraints. The aim was to ensure that tariff increases are kept to a minimum through

improvement in efficiency and reduction in technical and non technical losses.

3.9.3Third phase (2002-2005): The efforts were made towards consolidation of the

functioning and financial position of the new entities and achievement of more reliable

power supplies. In this phase most of the financial restructuring measures in DISCOMs were

implemented.

3.9.4 Fourth Phase (2005-2009): focused on achieving higher consumer satisfaction

through progressively ensuring adequate supply of power to meet the power demand,

attainment of high quality and efficiency in electricity services and deepening of power

sector reforms to increase the competition and private sector participation.

3.9.5 Profile of Restructure:

a) A separate generation company under the companies Act to whom all the current assets

and employees who have exercised their option to the generation company were

transferred. The management shall have autonomy to function commercially.

b) Like wise a separate transmission company has been also set up with relevant assets and

employees who have exercised their options to the company were transferred to it with a

clear charter of duties. It will have to work in close co-ordination with the Power Grid

Corporation in the matter of improvement of transmission system and opening of new

lines to meet the expanding generation capacity in the state. It may even be through

participation in the equity as a joint venture. It should also function as a commercial

entity.

106

c) Formation of distribution companies, to whom the assets like sub transmission and

distribution net work including substations, transformers as well as the employees were

transferred.

d) Employees were allotted to the respective companies through the option process.

3.9.6 Implementation of Reforms21

:

Enacting the Reforms Act was the first step in the process of reforms in AP. Subsequently

APSEB was unbundled into APGENCO and APTRANSCO, in February 1999. (This is

called First Transfer Scheme). In April 2000, APTRANSCO was further unbundled to

APTRANSCO managing the Transmission system, and the following four Distribution

Companies (Second Transfer Scheme), to manage the Distribution system.

APCPDCL: Anantapur, Kurnool, Hyderabad, Ranga Reddy, Mahaboob Nagar, Medak and Nalgonda.

APNPDCL: Warangal, Karim Nagar, Adilabad, Nizamabad and Khammam

APSPDCL: Kadapa, Chittoor, Nellore, Ongole, Krishna and Guntur

APEPDCLL: Srikakulam, Vijaya Nagaram, Visakapatnam, East Godavari and West Goadavari.

107

CHART 3.3

STRUCTURE OF POWR SECTOR IN

ANDHRA PRADESH BEFORE REFORMS

Source : Program and project implementation plan. Volume 1, main Report; prepared by APSEB. Annexure

4-4A.

108

CHART 3.4

RESTRUCTURING OF APSEB

(First Transfer Scheme)

Source : Program and project implementation plan. Volume 1 main report, prepared by APSEB Annexure 4-

4B.

109

CHART 3.5

RESTRUCTURING OF APSEB

(Second Transfer Scheme)

Source : Program and project implementation plan. Volume 1, Main Report, prepared by APSEB, Annexure 4-

4b.

110

3.10 ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION

The Andhra Pradesh Electricity Regulatory Commission was constituted vide G.O.Ms.No. 65

Energy (Power – III), dated: 31-03-1999 as an independent statutory body under the

provisions of AP Electricity Reform Act 1998. The commission comprises two members

appointed by the Govt. of A.P. as per the selection procedure in the Reform Act.22 the

commission became operation wef 03-04-1999.

The Electricity Act 2003 came into force wef from 10-06-03 while repealing the three earlier

Acts viz the Indian Electricity Act. 1910. The Electricity (Supply) Act 1948, and the

Electricity Regulatory Commission Act 1998 Section 86 of the Electricity Act 2003

enumerates the functions of the State Electricity Regulatory Commission.

The main functions of the commission are:

� To aid and advise the State Government in matters concerning generation, transmission, distribution and supply of electricity in the state.

� To regulate the working of the licensees and to promote their working in an efficient, economical and equitable manner.

� To issue licenses in accordance with the provisions of the Act (s). � To determine the tariff for generation, supply, transmission and wheeling of

electricity. � To regulate the electricity purchases, and procurement processes of Distribution

licenses including the price of electricity to be purchased. � To facilitate intra – state transmission and wheeling of electricity. � To promote cogeneration of electricity from renewable source of energy. � To adjudicate upon the disputes between the licensees and generating companies. � To fix the trading margin in the intra state trading of electricity if considered

necessary � To specify the standards with respect to quality, continuity and reliability of service

by licensees.

In discharge of the functions the commission shall be guided by the National Electricity

Policy, National Electricity plan and tariff policy notified by the Government of India under

section 3 of Electricity Act 2003.

111

CHART 3.6

ORGANISATION CHART OF APERC

112

Following are the milestones in the reforms programme of Andhra Pradesh power sector23

June 1995 : Constitution of High Level Committee (Hiten Bhaya Committee)

Feb 1997 : Government policy statement issued

April 1998 : Andhra Pradesh reforms bill passed in Assembly

Feb 1999 : Reforms Act become effective and Andhra Pradesh State Electricity Board unbundled into APTRANSCO and APGENCO. (First Transfer Scheme)

March 1999 : Andhra Pradesh Electricity Regulator Commission established

April 2000 : APTRANSCO unbundled in to Transmission and 4 Distribution companies. (Second Transfer Scheme)

July 2000 : Enactment of Special Act for power theft

April 2001 : Regular license to DISCOMS.

April 2002 : Administration and operational autonomy to DISCOMS, Citizens Charter introduced. Employees have been allotted to the six companies through the option process. The Managing Directors of DISCOMS were designated as Chairman and Managing Director. Master Trust and individual Trusts for pension, provident fund and gratuity have been established to take care of terminal benefits of employees. The trusts are functioned by issue of bonds with Government guarantee and current contribution.

Nov 2002 : Monitoring of performance, based on key performance indicators for TRANSCO and DISCOMS

March 2003 : Additional financial autonomy to DISCOMs.

June 2005 : Bulk supply and trading activities vested with DISCOMs, as per the Electricity Act 2003. (Third Transfer Scheme).

Thus it may be seen that reforms in the power sector of Andhra Pradesh were under taken

through a step by step process, which greatly facilitated its success and sustainability.

3.11 PROFILE OF APTRANSCO

Transmission Corporation of Andhra Pradesh limited incorporated24 under the companies Act

1956 with its head Quarters at Hyderabad on 29-12-1998 (8th pausa–1920 saka) with the

following main objectives.

1. To acquire, establish, construct, and operate Extra High voltage, High voltage, Medium voltage and Low voltage lines and associated substations.

2. Purchase and sale of electrical energy and Co-ordinate with other companies.

3. Plan investigates and prepares project reports, load forecasts and finalization of purchase of power from new generating plants.

4. As a helper and servicing agency for the subsidiaries.

113

Transmission Corporation of Andhra Pradesh Ltd. (from now on wards called

APTRANSCO) is the successor company of ears while APSEB (Andhra Pradesh state

electricity board) which was formed in April 1959 under the provisions of Electricity

(supply) Act 1948.

Following are the main functional wings of the APTRANSCO25

1. CE / Construction 2. CE / Transmission 3. CE / Construction (4oo KV) 4. CE/ Lift Irrigation 5. CE / Power Systems 6. CE / Planning RAC and Reforms 7. CE / Telecommunications 8. CE / Civil 9. CE / Zone (6 zones) (Metro/Hyderabad, Rural/Hyderabad, Warangal, Kadapa, Vijayawada, Visakapatnam) 10. CE / Commercial APPCC 11. CE / Investment Promotion Cell 12. CE / Operation and Rural Electrification 13. CE (mechanical) 14. FA & CCA (T&.R) 15. FA & CCA (A,E&R) 16. FA & CCA (CF.) 17. Addl. Secretary 18. Executive Director (General)l 19. Company Secretary

114

CHART 3.7

ORGANISATION CHART OF APTRANSCO

115

Chief Engineer (Power System):

This wing deals with computation of protective relay settings for entire EHT network of AP

power system including transmission lines, (400 KV 200 KV and 132 KV), power

transformer, reactor and bus bar protection. Coordinating with IPPSs/CPPs. formulation of

charging instructions for new grid lines and 400 KV ICTs.

Analysis of major disturbances including all gird breaker trippings in the grid system is

carried out on day to day basis for ensuring reliable operation. This group represents

APTRANSCO in all meetings of protection coordination committee of SRPC, Bangalore.

Hot Lines: Hot lines mean energized Transmission / Distribution Lines. Sometimes the

situation warrants maintenance of the power line without switching it off, where the hotline

technique comes into picture. There are two types of Hot lines maintenance techniques.

1. Hot stick method: using insulated sticks 2. Barehand Technique (A live line technique): Using conductive suit along with

insulated ladder.

Chief Engineer (Telecommunications):

The Telecom Organization in APTRANSCO is responsible for planning, design,

procurement, erection, testing and commissioning, operation and maintenance of Real time

data acquision, ERP networking, Remote meter reading, transmission line protection and

EPABX, LAN/WAN Networks along with Mini EPABX System, FAX, Audio Conferencing

equipment at corporate offices, in Vidyut Soudha, and other Zonal Offices throughout the

state.

This wing is involved in planning, design, procurement, erection, tasting, commissioning and

O&M of the following communication systems.

i. PLCC communication to all 400 KV, 220 KV & 132 KV Grid Substations and Generating Stations on Express, Black Channels and Generation Channel Networks for voice and data communication and carrier inter tripping.

ii. Satellite base communication system (VSAT) provided at most of the Grid Substations (306 nos) throughout the State for voice and data communication.

Vgilance wing

The Vigilane Wing of APTRANSCO13 is headed by JMD (V&S), an IPS Officer of the rank

of Inspector General of Police who is on deputation from the Government of Andhra Pradesh

116

and consists of the Anti power Theft Squad (APTS) Police Stations, Detection of Pilferage of

Energy Wings, Quality Control Wing, and Quality Assurance Wing & MRT Vigilance Wing.

Chief Engineer (Construction):

Construction wing is in charge of Execution,9 monitoring of contracts, and progress of all

220 KV and 132 KV Transmission lines and substations Tie up with financial institutions

Budget allocation for 6 zones, and preparation of schemes for power evacuation and Bulk

loads, other DC works and PTCC approvals will be looked after by this wing.

Chief Engineer (Operation and Rural Electrification)26

:Main functions wing are,

� Implementation of Rural Electricity Programmes � Arranging replies to LAQs, LSQs, SMQ of APLA/Parliament Questions. � Information on Scheme Sanctions, extension of schemes, period of closure etc. � Cyclone Disaster Management, Prajapatham.

Chief Engineer (Civil):Main functions of this wing are :

� Scrutiny of estimates of all substations and lines.

� Finalization of renders and placing of purchase orders.

� Designs for all civil structures in 132 KV, 220 KV and 400 KV Substations.

Executive Director – Mechanical:

� Following are the main duties � Sanction of motor car loan, motor cycle loan, bicycle loan marriage loan,

house building loan, GPF part final withdrawal, temporary advance and computer advance.

� Sanction of monthly medical allowance to all employees working in Vidyuth Soudha, personnel bills, credit bills of hospitals pertaining to all the in service/retired employees/family pensioners.

Chief Engineer / Lift Irrigation:

� Over all supervision and monitoring of construing EHT substations lines for Lift Irrigation works: Arranging the required materials, inspections, Co-ordination with I & CAD departments. Monitoring 0f erection, testing and commissioning of 132 KV, 220 KV lines and substations under lift irrigation schemes.

Chief Engineer/Construction (400 KV)

� Over all supervision and monitoring of 400 KV works. Arranging required materials, inspectors:

� Monitoring of Erection, testing and commissioning of 400 KV lines and substations

117

Chief Engineer (Planning, RAC & Reforms)

� Follow up action on additional information called for after filings of ARR and Tariff.

� Filing of tariff proposed and connected aspects for SLDC. � Review petitions on tariff order. � Correspondence on electricity act 2003.

Chief Engineer/Zone: In charge of O & M of EHT lines substations.

� Preparation of budget proposals for all EHT lines and Substations.

� Placing orders for equipment spares. � Review of ongoing works.

Chief Engineer/Transmission:

� Supervision and monitoring of works in 6 zones. � Preparing indent of O&M material and allotment of O&M equipment to the

field. � To look of after the works relating to repair of equipment such as power

Transformers, Panels etc. � To arrange for manning of EHT substations etc.

Executive Director (General):

� Preparation of material for press release. � Co-ordination and collection of information from all 4 DISCOMS. � Undertaking translation works English – Telugu – English. � Maintaining adequate communication material related to publicity of

schemes, Development activities. � To maintain advertising and printing sections.

Company Secretary:

� Filing of statutory declaration as to compliance in respect of incorporation (Section 33 of the Act).

� Registration of return of allotment and contracts relating to allotment of shares for consideration, other than cash. (Section 75 of the Act).

� When there is increase in the share capital, informing the same to the Registrar of the companies (Section 97 of the Act).

FA & CCA (T&R)

(Financial Adviser & Chief Controller of Accounts (Trusts & Research):

� The works relating to APTRANSCO PF Trust, P&G Trust, and EL encashment Trust.

� Investment Portfolio and Fund Management in respect of all Trusts.

� Works relating to cash books, ledgers & trial balance.

FA & CCA (ACE & R):

(Financial Advisor & Chief Controller of Accounts, Audit, Expenditure & Revenue):

� Over all supervisor of internal Audit and Audit cell sections,

118

� Review Scrutiny, consolidation and submission of replies to Government / Accountant General (AP Legislative Secretariat, duly obtaining the approval from APTRANSCO.

.

FA & CCA (CF):

Financial Advisor & Chief Controller of Accounts (Corporate Finance):

� Finalization of financial projections for Annual Plan / Five year plan by collecting

required data from various sources, obtaining approval, and furnishing to State Govt.

/ Planning Commission.

� Preparation of cash grants for the lump sum provisions approved by the APERC in

Tariff order under capital and Revenue Expenditure and obtaining approval of

competent authority.

Additional Secretary:

� Sanction of all kinds of leaves to P&G and Accounts officers. � NOC for obtaining passport, for acquiring higher qualification, pilgrimage etc. � Transfer and posting of employees of P&G and Accounts services. � Proposals for absorption of employees from one company to another company in respect of P & G and Account Services etc.

CHIEF ENGINEER (IPC)

� To coordinate with DISCOMS on the subject relating to power purchases from the upcoming conventional and Non-conventional Energy Power Projects Under Private / State Owned / Central Services.

CHIEF ENGINEER (COMMERCIAL-APPCC):

� Convener of power purchase coordination committee and deals with the purchase of power from IPPs and other utilities.

� Responsible for entering power purchase agreements with the private generators.

3.12 ENTER PRISE RESOURCE PLANNING (ERP):

ERP is being implemented in APTRANSCO, for improving the performance of the internal

business processes. ERP system in the company integrates business activities across

functional departments, from Service Planning, dispatch of material, material distribution,

inventory control etc. ERP in APTRANSCO is under application in the following modules.

1. Material Module 2. Project Module 3. Operation and Maintenance Module 4. HRD and Payroll Module and 5. Finance Module

119

Due to implementation of ERP any employee of the organisation can have the latest

information of material transaction, equipment details, etc. in the system.

3.13 RECRUTMENT:

Recruitment is the process of searching for prospective employees, and stimulating them to

apply for the jobs, in the organisation. APTRANSCO relies both on internal and external

sources of recruitment. Potential candidates are attracted towards the organisation by

advertising in news papers, and in the website of the organisation.

3.14 SELECTION:

Whenever vacancies arise in the organisation, then APTRANSCO starts searching of the

right candidates for the right job by calling them through advertisements or selects the

candidates within the organisation, by giving promotions to the junior level employees. Thus

selection process is carried out from (i) Internal Sources and (ii) External Sources.

(i) Internal Sources: By means of promoting employees to the feeder cadre after getting

specified experience.

Expl : Employees who had Diploma qualification (called sub-engineering) will be

promoted as Addl. Asst. Engineers after attaining experience of 5 years Selection is he ld

in the following services.

1. Engineering Services : At Asst. Engineer Cadre 2. Accounts Services : At Junior Accounts Officer Cadre 3. Personal & General Service: At Junior Personnel Officer Cadre.

On compassionate grounds to the legal heir of the bereaved employees to the cadre

depending on the qualification, but max to the cadre of sub-engineer, or office subordinate

etc.

(ii) External Sources: Selection process from the external sources involves written

examination, and interview. Employees thus selected will be kept under probation for a

period of two years.

120

3.15 TRAINING AND DEVELOPMENT:

APTRANSCO has its Corporate Training Institute at its Head Quarters, Hyderabad under the

control of CGM (HRD). Training & Development Programmes are arranged to Engineering,

Accounts and Personal & General Service employees in the following fields

i. Technical ii. Human Resource Development

iii. Information Technology iv. Commercial and Accounts v. Regulatory Affairs

Induction Training Programme is provided to the newly recruited employees to

acquaint with the organisation culture, procedures, rules and regulations etc.

3.16 PROMOTION POLOCY

Promotions in APTRASNCO are generally based on Seniority. All the employees

have to submit their Self Assessment, annually to their controlling officer. The

controlling officer will be awarding grade (Ranging from A to E) in Annual Appraisal

to the Management. Promotion will be given based on the Annual Appraisal Report.

3.17 GENERAL DISCIPLINE:

APTRANSCO has code of conduct for its employees which are to be followed by all.

Betting, gambling, Smoking, disobedient towards higher officers, pampering of files etc.

attracts the disciplinary action against the error employees.

3.18 INDUSTRIAL RELATIONS:

Industrial atmosphere in general is peaceful. There are approximately 8 nos.

Associations/Unions. So far neither major strike not agitations is reported.

3.19 CLASSIFICATION OF EMPLOYEES:

Employees of APTRANSCO are classified as

1. Employees on Regular basis 2. Contract workers outsourced from private agency 3. Consultants such as Advocates, persons having technical expertise, Chartered

Accountants, etc. Following nature of employees is outsourced.

1. Drivers 2. Data Entry Operators

Skilled and Semiskilled Persons for manning the EHT Substations

121

3. Watch and word for offices and substations

4. Security guards for EHT sub stations, stores etc.

3.20 WORKING HOURS:

Normally office working hours are source per day, 6 days in a week. Sunday and Second

Saturday is holiday for office going employees? Employees working in the substations will

have shift duties and individual employee will have weekly off.

Employees working in the field have to no regular timings. They have to mean the

Emergencies at any time, and hence will work round the clock in order to maintain the

continuous power supply.

3.21 PAY AND ALLOWANCES:

Pay scales are fixed to all the employees based on their cadre Employee Salary Structure include the following

i) Pay and special pay ii) Dearness Allowance iii) House Rent Allowance iv) Family Planning Allowance v) Medical Allowance vi) City Compensatory Allowance

Annual investment is sanctioned to all the employees and PG innovates (Two number) will

be sanctioned from the date of attending the qualifying examination or at the time of joining

in service.

Pay Revision will take place for every 4 years and Dearness Allowance will be enhanced for

every Six months (in the months of January and July) based on the Consumer Price Index.

Travelling Allowance and Dearness Allowance is sanctioned to the employees who will tour

the various places on duty for attending O&M works and construction works, etc.

3.22 LEAVES:

3.22.1 CASUAL LEAVE:

Every employee is entitled for 15 days of casual leave in a calendar year and 5 days of

optional holiday’s casual leave cannot be granted for more than 10 days at a time.

122

3.22.2 EAR NED LEAVE:

All the regular Employees will have 15 days EL for every six months in a calendar year. 15

days EL is credited to their account at the beginning of January and July. An employee can

have maximum of 300 days at his/her credit.

An employee shall encash 15 days of EL in every year or 30 days in case the person cans not

encash in the previous year.

3.22.3 HALF DAY LEAVE:

Class I, II and III Employees are eligible to avail 20 days of half pay leave in a calendar year

an employee can avail. An employee can commute 240 days on medical grounds over the

entire service. But for double the commuted days will be reduced from the leave account.

Class IV employees shall have 15 days of HPL and after completion of 20 years of service

shall have 20 years of HPL in a calendar year Employees who have problem of heart, kidney

cancer etc. can avail 6 months of full pay instead of half pay unless they have leave account

in their credit.

3.22.4 EXTRA ORDINARY LEAVE:

All the employees can avail EOL of 5 years during which no salary shall be paid.

3. 22 5 SPECIAL DISABILITY LEAVE:

Employees who have injured or become disabling on duty shall have special disability leave

for 120 days of full pay for class I, II and III employee and 50 days for day IV employees

and later shall have half pay leave.

3.22 6 MATERNITY LEAVE:

Married women employees who have not more than two children shall avail 6 months of

maternity leave from the date of delivery with full salary and 6 weeks for miscarriage.

3.22.7 PATERNITY LEAVE:

Married men working in APTRANSCO (regular employees) shall have 15 days of paternity

leave from the date of delivery of wife and who do not have more than two children.

3.22.8 SPECIAL CASUAL LEAVE:

Special causal leave is sanctioned under the following circumstances.as shown in Exhibit3.3

123

EXHIBIT 3.3

SPECIAL LEAVE ALLOWANCE

S.No. Particulars No. of days

1 Women who have undergone Family Planning Operation

6 days

2 Men who have undergone Family Planning Operation

5 days

3 Employees who have selected for National / International tournaments

30 days

4 Employees participating in cultural activities 6 days

5 Member of purchase committee 12 days

6 Office bearers of APSEB Employees co-operative stores.

12 days

Source:AP Trasco Records

124

3.23 FRINGE BENEFITS:

General Provident Fund: An employee who had completed one year service is eligible for

membership of GPF. An amount of Rs. 6% from the basic pay of an employee will be

recovered who had obtained GPF Account. Presently 8 % interest is being paid to the GPF

amount.An employee can have advance loan from his / her GPF credit and can have part

final withdrawal after knowing complex 20 years of services or having balance service of 10

years.Employees who have joined in the department after Sept. 2004 will have to avail

Employees Provident Fund (EPF). Employees who have EPF A/c have to contribute 12% on

their Pay and DA towards this fund and the contribution payable by the company towards

this fund shall be at the rate of 12% of the Pay and DA.

3.24 LEAVE TRAVEL CONCESSION: (LTC) all the employees of the company who

have completed 5 years of service are eligible to avail LTC and home town visit, in a block

period of 4 years. (2009-2010: Home Town, 2011-2012 LTC). However LTC is limited to

travel within the state and place of home town can be changed once in service by giving

declaration.

3.25 MEDICAL REIMBURSEMENT13

:

The maximum ailing limit of Rs. 2.00 lakhs is fixed for all the minor ailments / diseases for

life time with effective from 01.04.2009 for employees / pensioners and their dependents /

family pensioners other than major ailments specified.

A maximum ceiling limit of Rs. 2.00 lakhs (Rupees Two Lakhs only) is fixed for each time

and each ailment separately for different major ailments / surgeries / treatments i.e. Kidney

transplantation, cancer, Neurosurgery, etc.

3.26 GROUP INSURANCE SCHEME:

Management provided GIS to its employees. At preset predetermined amount is deducted

from the salary of each employee in every month towards contribution to this scheme.

3.27 WELFARE MEASURES:

Management provides loan for the employees towards purchase of house and site

1. For purchasing house an amount of Rs. 10, 00,000/- (Rupees Ten lakhs / and to purchase

site an amount of Rs. 1, 00,000/- (Rupees one lakh) will be sanctioned.

125

3.28 DISPENSARY:

There is one dispensary at the Head Quarters of APTRANSCO, Hyderabad for the

employees, under the in charge of qualified and well experienced medical officer of the rank

of Dy. Civil Surgeon with 2 Nos Asst. Civil Surgeons one Homeopathi Clinic also provided

at the Head Quarter.

3.29 RECREATION CLUB:

APTRANSCO provided Vidyuth Soudha Recreation Club at its Head Quarters where

employees can relax and have some time to spend themselves. Company felt the need for

recreation club. So it started a recreation club with an aim to involve people from all

departments. The club houses consist of T.V, caroms, chess etc.

3.30 SPORTS COUNCIL:

With a view to promote sports and games, company had so sports council. The council

organises outdoor sports, games, holds tournaments. For functioning of the council, and its

activities, management is providing all necessary assistance. The council conducts

interdepartmental titles for games like cricket, volleyball, tennis, etc.

3.31 CANTEEN FACILITIES:

For the benefit of its employees, the company is providing canteen at its Head Quarters.

Canteen is professionally maintained by the department. Management provided necessary

facilities, such as building, required utensils, furniture etc. to ensure satisfactory service.

Meals, Tiffin, Snacks, Coffee, Tea, etc. are provided at subsidized rates.

3.32 ADVANCES:

Following are the various advances (Table 3.20) arranged to the employees working in

APTRANSCO.

126

TABLE 3.20

TABLEE OF ADVANCES

S.No. Name of the Advance Amount in Rs

1 Bicyde Advance 5,000/-

2 Moped Advance 25,000/-

3 Motor Cycle / Scooter Advance 60,000/-

4 Motor car Advance 4, 50,000/-

5 Marriage Advance 30,000/-

6 Festival Advance 3,000/- or 2,000/-

7 Personal computer Advance 50,000/-

8 Education Advance 5,000/- Source : T.O.O. (Addl. Sec-per) Ms.No. 82, dt : 31-05-2010 of AP Transco

127

3.33 CREACHE:

Company provided crèche at its head quarters to look after the babies and children of the

employees.

3.34 TECHNICAL LIBRARY:

There is one Technical Library at the company’s Head Quarters, where all the journals,

magazines Periodical etc. published by various Govt. departments such as REC, CEA, CBIP

and other Associations organisations such as IEEMA, ESCI, etc. are available. Technical

information on power transformers, towers, switch gear, etc. is kept available for study of the

employees.

In addition to the Technical information, General information can also be obtained since,

different magazines news papers are subscribed by the library.

3.35 SAFETY MEASURES:

“Prevention is better than cure”, and so APTRANSCO aims at providing safe working

conditions to prevent accidents. Company adheres strictly to the provisions of the Factories

Act. It provide safety devices to work safety and confidently. The company supplies, Helmet,

Hand Gloves, Earth rods, Torchlight, etc. Who are involved in operation and maintenance of

the lines and substations? APTRANSCO arranges Fire Fighting Equipment at each and every

EHT Substation and conducts periodical examination of the all safety equipment.

13T.O.O (ED/Mechanical) MS.No. 16 dots: 08-04-2011

Table 3.21 shows the total No. of EHT substations and lines of APTRANSCO in

CKM as on 31-03-2010

Table 3.22 shows the total No. of interstate transmission lines of APTRANSCO in

CKM as on 31-03-2010

Table 3.23 shows the consolidated Balance Sheet of APTRANSCO as on March 2004

to March 2010.

Table 3.24 shows the consolidated Profit and Loss Account of APTRANSCO as on

March 2004 to March 2010.

128

TABLE 3.21

DETAILS OF EHT SUBSTATIONS AND LINES

S.No.

Item Unit As on 31-03-2009

Achievement in 2009-10

As on 31-03-2010

1. Length of Lines

A 400 KV CKM 3008.70 163.67 3172.37

B 220 KV CKM 12502.58 190.60 12693.18

C 132 KV CKM 14938.57 164.88 15103.45

Total CKM 30449.85 519.15 31569.00

2. Sub-Station:

A 400 KV Nos. 9 0 9

B 220 KV Nos. 33 3 96

C 132 KV Nos. 269 8 277

Total Nos. 317 11 382

Source: Power Development Statistics 2009-10, P-1 of

129

TABLE 3.22

INTER STATE TRANSMISSION LINES (APTRANSCO)

S.No. Name of the Inter State Line

SC/DC Voltage in KV

Length in KM

Date of Commissioning

1. Gooty-Alepura (Karnataka) (Originally

Gooty – Lingapur) SC 220 144.9 25-09-1975

2. Tandur-Sedem (Karnataka) (Originally Hyderabad –

Shahbad) SC 220 47.78 28-02-2001

3. Chittoor – Thiruvalam (Tamilnadu)

SC 220 27.8 21-06-1970

4. Sullurpet – Gummadipoondi

(Tamilnadu) (Originally Nellore-Ennore)

SC 220 21.12 01-05-1982

5. Upper Sileru-Balimela (Orissa)

SC 220 12 01-07-1973

6. Lower Sileru-Barsur (Chattisgarh)

HVDC 110 37 18-07-1984

7. Kakinada – Yanam (pondichery)

SC 132 35.9 25-10-1998

8. 132 KV Guntakal - Hampi SC 132 92 1965 Source: Power Development Statistics: 2009-10, P.97 of APTRANSCO

130

TABLE 3.23

CONSOLIDATED BALANCE SHEET S.No. Schedule Note As on

31st March 2004

As on 31st

March 2005

As on 31st

March 2006

As on 31st

March 2007

As on 31st

March 2008

As on 31st

March 2009

As on 31st

March 2010

NET ASSETS

1. Net Assets 9907.30 11298.05 13059.33 14377.13 5495.36 5967.50 6547.43

Gross Block 3968.30 4622.7 542.98 6285.66 2251.67 2543.45 2860.38

Less: Accumulated Depreciation

5939.00 6675.35 7646.35 8091.47 3243.69 3424.05 3687.05

Net Fixed Assets 1545.74 1872.17 1732.58 2436.30 430.79 511.59 838.56

2. Capital Expenditure in progress

1545.74 1872.17 1732.58 2436.30 430.79 511.59 838.56

3. Assets not in use 0.26 0.26 1.92 2.05 0.26 0 0

4. Deferred costs 0.16 0 0 0.65 0 0 0

5. Intangible Assets 0.42 0.9 2.2 0.86 0 0 0

6. Investments 101.33 156.96 515.3 235.0 137.57 100.22 91.92

APTRANSCO equity investment in Discoms

1297.22 1297.22 0 0 0 0 0

NET CURRENT ASSETS

7. Total current assets 6650.96 7252.66 6623.43 8049.84 2074.90 2494.97 1785.33

Less total current liabilities

0 0 0 0 0 0 0

8. Security deposits from consumers (incl Adm. &

Gen. Expen.)

1221.69 1423.22 1672.32 1883.39 0 0 0

9. Other current liabilities 5070.48 5959.61 4879.32 6024.99 2471.67 2821.44 2257.71

Total current liabilities 6292.17 7382.83 6551.64 7908.38 2471.67 2821.44 2257.71

Net current liabilities 358.79 621.62 71.79 141.46 0 (326.47) (472.38

10. Subsidy receivable from Government

621.62 621.62 0 0 0 0 0

Accumulated Deficit 348.76 330.04 288.4 272.17 0 0

NET ASSETS 10213.30 10824.35 10258.54 11179.96 3709.39 4145.15

Financed by

11. Borrowings for working capital

13.77 0 0.05 171.11 0 0

12. Payments due on capital liabilities

(1.68) (3.46) 91.16) 0 0 0

13. Capital liabilities 4818.67 5133.67 5299.05 5850.00 1901.40 1996.81

14. Funds from State Government

538.42 204.08 279.19 322.34 23.24 188.70

15. GoAP Equity 2076.23 2262.41 2262.41 2262.41 779.22 779.22

16. APTRANSCO equity in Discoms

1297.22 1297.22 0 0 0 0

17. Contributions, Grants and subsidies towards cost of

capital assets

1291.90 1636.57 2018.04 1890.69 435.42 481.68

18. (i) Reserve and Reserve Funny

96.42 192.35 72.05 242.18 66.08 73.61

(ii) Deferred Tax Liability 0 0 0 103.32 167.45 218.36

19. Surpluses 82.35 101.51 328.91 337.21 336.58 406.77

TOTAL FUNDS 10213.30 10824.35 10258.54 11179.96 3709.39 4145.15 Source: Administration Reports for the year 2004-05 to 2009-10, Published by APTRANSCO.*Includes TRANSCO and DISCOMS

131

TABLE 3.24 CONSOLIDATED PROFIT AND LOSS ACCOUNT

S.No. Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

A REVENUE

1. Revenue from sale of power 9007.24 1661.28 0 0 0 0

2. Transmission charges – DISCOMS

0 0 0 648.78 698.86 779.30

3. SLDC Charges 0 0 0 0 43.71 37.29

4. (i) Transmission &SLDC Charges

0 772.20 609.78 0 0 0

(ii) Annual fee, Open Access 0 0 9.73 23.64 0 0

5. Inter State Sale of Power / UI Charges

110.45 51.39 0 0 0 0

UI Charges 166.60 56.55 0 0 0 0

6. Capital contributions 0 0 0 0 0 0

7. Less Electricity Duty 0 0 0 0 0 0

TOTAL (1 to 7) 9284.29 2541.40 0 672.42 742.57 816.59

8. Revenue Subsidies and Grant 0 66.18 0 0 0 0

9. Other Income 216.0 88.57 52.26 25.12 60.90 68.70

TOTAL REVENUE (7 to 9) 9500.29 2696.15 671.77 697.54 803.47 885.29

B OPERATING CHARGES:

10. Purchase of power 8858.54 1899.71 0 0 0 0

11. Transmission & SLDC Charges

0 0 0 0 0 0

12. Repairs and Maintenance 58.56 105.77 106.12 91.47 86.13 93.10

13. Employee Costs 107.62 146.71 133.64 144.91 171.58 183.88

14. Administration & General Expenses

21.56 21.30 24.18 23.92 28.39 29.56

15. Depreciation 223.81 223.0 242.43 263.44 291.78 317.50

16. Incentive to HT Consumer 0 0 0 0 0 0

17. Interest and Finance Charges 234.11 170.89 163.12 167.77 184.39 195.31

SUB TOTAL (10 to 17) 9504.20 2567.33 691.51 762.27 819.35

18. Less expenses capitalized

(i) R&M, employee costs, adm etc

32.28 31.23 0 40.28 44.93 48.57

(ii) Interest and Finance charges

27.04 31.02 0 25.39 26.97 32.57

TOTAL (18 (i) to 18 (ii) 59.32 62.25 0 65.67 71.90 81.14

19. Other debits (Misc. Write off etc.)

1.02 0.16 6.18 0 2.78 0.27

20. Expenditure on cyclone works (Net)

0 0 0 0 0 0

SUB TOTAL (19 to 20) 1.02 0.16 6.18 0 2.78 0.27

26. Total expenditure 9443.86 2505.29 622.11 625.84 693.13 738.48

27. Profit / Loss before Tax 56.43 190.86 0 71.70 110.34 146.81

28. Provision for income tax & FBT

3.15 20.87 7.55 8.66 12.90 25.71

29. Provision for deferred tax 0 0 22.64 25.80 38.33 50.91

30. Profit / Loss after tax 53.28 169.99 49.66 37.24 59.11 70.19

31. Net Prior period charges (22.32) 34.30 8.64 (1.72) (2.76) 0

Net Surplus (+) / loss (-) 30.96 204.29 27.02 35.52 61.87 70.19

Source: Administration reports from 2004-05 to 2009-10 published by APTRANSCO

Table 3.24 shows transmission line losses of APTRANSCO in % as on 31-03-2010

132

Table 3.25 shows the line losses of APTRANSCO from 2004-05 to 2009-10

TABLE 3.25

LINE LOSSES S.No. Year % Transmission losses

in percentage Transmission and

Distribution losses in percentage

1. 2004-05 4.53 21.42

2. 2005-06 4.48 20.21

3. 2006-07 3.94 19.82

4. 2007-08 4.27 19.19

5. 2008-09 4.02 18.63

6. 2009-10 4.65 18.34 Source: Power Development in Andhra Pradesh (Statistics) Extracts from Energy

Balance Sheet from 2004-05 to 2009-10.

133

Table 3.26 shows availability of transmission system of APTRANSCO from 2004-05 to

2011-12

TABLE 3.26

AVAILABILITY OF THE SYSTEM

S.No. Year Availability of the system (in %)

1. 2004-05 99.85

2. 2005-06 99.87

3. 2006-07 99.89

4. 2007-08 99.60

5. 2008-09 99.75

6. 2009-10 99.89

7. 2010-11 99.89

8. 2011-12 99.89 Source: APTRANSCO records

134

TABLE – 3.27

PROGRESS UNDER FIVE YEAR PLANS –

TRANSMISSION AND DISTRIBUTION

S.No. Plan Period As on NUMBER OF SUB-STATIONS TRANSMISSION Lines in (CKM)

400

kV

220

kV

132

kV

66

kV

33

kV

Total 400

kV

220

kV

132

kVs

1 End of2nd Plan (1956-61) 31.3.1961 6 65 71

2 3rd Plan (1961-66) 31.3.1966 11 35 127 173 1872

3 3 Annual Plans (1966-69) 31.3.1969 2 17 35 143 197 637 2012

4 4th Plan (1969-74) 31.3.1974 6 25 18 248 297 1140 2848

5 5th Plan 91974-78) 31.3.1978 10 29 20 340 399 1725 3160

6 2 Annual Plans(1978-80) 31.3.1980 15 42 20 554 631 2437 4322

7 6th Plan (1980-85) 31.3.1985 19 64 11 781 875 4221 5385

8 7th Plan (1985-90) 31.3.1990 29 106 10 1131 1276 5385 7769

9 2 Annual Plans (1990-92) 31.3.1992 37 123 10 1250 1420 5978 8806

10 8th Plan (1992-97) 31.3.1997 54 162 4 1652 1872 7978 10524

11 9th Plan (1997-02) * 31.3.2002 3 69 186 0 1941 2199 1301 10341 12413

S.No. Plan Period As on NUMBER OF SUB-STATIONS TRANSMISSION Lines in (CKM)

400

kV

220

kV

132

kV

66

kV

33

kV

Total 400

kV

220

kV

132

kVs

12 10th Plan (2002-03) 31.3.2003 3 73 191 0 2123 2390 2033 10940 12793

13 10th Plan (2002-04) 31.3.2004 3 76 210 0 2329 2618 2033 11127 13030

14 10th Plan (2004-05) 31.3.2005 3 78 229 0 2474 2784 2033 11462 13351

15 10th Plan (2005-06) 31.3.2006 7 79 243 0 2642 2971 2686 11570 13895

16 10th Plan (2006-07) 31.3.2007 7 82 256 0 2821 3166 2816 11784 14313

Total 10th Plan 4 9 65 0 698 776 783 844 1521

135

17 11th Plan (2007-08) 31.3.2008 8 90 264 0 3023 3385 2988 12236 14706

18 11th Plan (2008-09) 31.3.2009 9 93 269 0 3355 3726 3009 12503 14939

19 11th Plan (2009-10) 31.3.2010 9 96 277 0 3714 4096 3172 12693 15103

Source : Power development statistics 2009-10 P.5 of APTRANSCO

1) Gooty (20.8.75) and Bommur, Nellore & Shapurnagar 132 KV SSs (76-77) upgraded to 220 KV

2) In 6th Plan Chandrayanagutta and Sullurpet 132 KV SSs are upgraded to 220 KV

3) In 7th Plan Miryalaguda, Yeddumailaram, A.P. Carbides, Paloncha,Bhimadole, Ramagundam and Warangal 132 KV SSs are upgradedto220 KV

4) In 2 Annual Plans Garividi (90-91) and Kalikiri (91-92) 132 KV SSs are upgraded to 220 KV

5) In 8th Plan yerraguntla, Kalwakurthy, Nandyal, Ananthapur, Renigunta, Moulali and Chillakallu 132 KV SSs are upgradedto 220 KV

6) In 9th Plan Kakinada, Siddipet,Karimnagar (1997-98), Waddekothapally,Nidadavolu (1998-99), Nirmal (1999-2000) 132KV SS's are upgradedto 220KV Bheemgal, Medchal, Tandur, Minpur (2000-01), Waddekothapally, Nidadavolu (1998-99), Nirmal (1999-2000) and 220 KV Chinakampally Sw. Stn is converted in to Conventional SS (2000-01)

7) In 9th Plan all lines (400 kV to L.T) reconciled.

*8) In 2001-02 33kV, 11kV and L.T. line lengths are reconciled

9) In 10th plan 1no. Shivarampally SS is upgradedto220 kV SS.

TABLE – 3.28

ACHIEVEMENTS IN 11TH FIVE YEAR PLAN –

PHYSICAL

S.No. ITEM Unit 2007-08 2008-09 2009-10

Achievement Achievement Achievement

1 Electricity Sales MU 48390.42 53215 59118

2(I) Transmission Lines

a) 400 kV CKM 171.56 21.14 163.67

b) 200 kV CKM 452.4 265.88 190.60

c) 132 kV CKM 392.2 233.05 164.88

2(II) Sub-Stations

a) 400 kV Nos 1 1

b) 200 kV Nos 8 3 3

c) 132 kV Nos 8 5 8

Source : Power Development Statistics 2009-10, P-31 of APTRANSCO.

136

TABLE – 3.29

LINES AND SUB-STATIONS (YEAR – WISE)

I. TRANSMISSION in CKM AND DISTRIBUTION LINES (in KM)

Sl.

No.

VOLTAGE At the end of March

1960 1971 1980 1990 1993 1994 1995 1996 1997 1998 1999 +2000 +2001 +2002 2003

1 400 kV Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 46 893 1301 2033

2 220 kV NA 1144 2437 4786 5645 6423 6901 7190 7379 7826 7826 8957 9607 10341 10940

3 132 kV NA 2473 4322 7389 8976 9651 9912 9956 10144 10359 10359 10922.5 11791 12404 12784

132 kV

UG Cable

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 8.5 8.5 8.5 8.5

4 66 kV NA 2743 2091 1570 348 334 334 334 266 186 186 186 0 0 0

5 33 kV 2833 6163 9178 17793 20551 21648 22880 23615 24024 25216 26559 29884 30517 30537 32284

33 kV

UG Cable

Nil Nil Nil Nil Nil Nil Nil Nil 35 35 35 35 36 21 21

6 11 kV 11918 33185 63541 117464 137229 142904 148104 150543 153167 156634 161845 166244 169649 165299 178056

11 kV

UG Cable

Nil Nil Nil Nil Nil Nil Nil Nil 244 244 244 244 244 265 265

7 L.T.

Lines in kV

13738 49584 107588 266018 335981 361471 382267 392786 397626 404621 414540 424277 460863 442209 467313

Total CKM 28489 95292 189157 415020 508730 542431 570398 584424 592885 605121 622246 640804 683608 662387 703705

+ Reconciled

II – SUB – STATIONS (Nos)

Sl. No

Voltage (kV) At the end of March

1960 1971 1980 1990 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

1 400 kV Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 2 3 3

2 220 kV - 2 11 25 37 41 44 47 50 53 56 59 63 69 73

3 132 kV* 6 17 38 102 131 151 155 154 158 161 164 170 180 186 191

4 66 kV 24 35 20 10 8 6 5 5 4 3 3 3 0 0 0

5 33 kV 65 143 372 949 1135 1265 1340 1420 1470 1521 1594 1764 1862 1941 2123

Total Nos 95 197 441 1086 1311 1463 1544 1626 1682 1738 1817 1996 2107 2199 2390

6 Distribution Transformers (Nos)

4667 18133 34701 80419 112067 119691 131692 141839 148024 160003 171766 186847 201801 216453 242668

7 Transformer Capacity (MVA)

354 1214 2463 6206 8362 9064 10120 10776.4 11389 12245 13320 14490 15650 16413 17763

137

(*) Reconciled figure

NA :Not Accounted for

Source : Power Development Statistics 2009 to P.103 of APTRANSCO

3.36 POWER SECTOR IN KARNATAKA

The history of the phenomenal development of the old Mysore27 State was synonymous to

the working of a few of its outstanding rulers and administrators. The principal persons who

have contributed to the prosperity of Mysore State through their farsighted vision were his

Highness the Maharaja Sri Krishnaraja wadiyar IV and famous dewans, Sir K. Sheshadri

Iyer, Sir M. Visweswaraiah and Sir Mirza Ismail. Among the many measures pertaining to

prosperity, the outstanding step was initiatives taken for harnessing Electric Power. The

history of power development in the Mysore State makes an interesting one. In fact, the first

light was lit on the soil before Thomas Alwa Edison invented electric bulb. During May

1878, on the occasion of marriage of His Highness Chamarajendra Wadiyar, twelve lamps

with dynamo and gas engine were imported from England and served to illumunate

the palace yard. Some incandescent lamps were imported from England and Mysore Palace

electrification was carried out by Mr. Charigton. It was the source of light for the palace up

to 26th September, 1908, when power supply from Shivasamudram reached the Mysore

Palace.

3.36.1 FIRST WATER POWER PLANT:

The first turbine that was set to motion in the entire eastern world was installed at Gokak falls

during 1886. Probably, it was astonishing news for many to be told that there was a water

power plant at Goad of the State successfully commissioned during 1886.

In June 1899, Captain A.J. De. Lotbiniere K.E., the then Deputy Chief Engineer of Mysore,

after studying the installation at the Niagara falls, conceived the idea of working the

machinery at the Kolar goldmines with electricity generated by the Cauvery falls. This

proposal received hearty support of Sir K. Sheshadri Iyer, the then dewan of Mysore and

Colonel D. McNail Campbell, the then Chief Engineer, Public Works Department of Mysore.

The distance over which power would have to be transmitted to the Kolar gold mines was 92

138

miles while the greatest distance at that time where power was transmitted from Niagara

Falls was only 26 Miles.

The true age of Electricity on Indian land started with the beginning of Cauvery Power

Scheme. The Mysore State Government under the then dewan Sir. K. Sheshadri Iyer, Colonel

Maniel Campbell the then Chief Engineer, Public Works and Captain A.J. De Leotbininiere

R.E. the then Deputy Chief Engineer, Public Works, established the Shivasamudram power

station at Cauvery falls with six units of 720 KW capacity each during 1902. The first pole

for a transmission line in India was erected on May 29, 1901. (In the case of Darjeeling

Hydro Scheme and Calcutta thermal scheme, the power generation was distributed at the

place of generation itself without any transmission). The 92 miles double circuit 35,000 volts

transmission line between Shivasamudram and Kolar Gold Field (KGF) was the longest bulk

power high voltage transmission line in the world. At that time. June 30, 1902, Mrs. Donald

Robertson switched on the line for the first time, which marked the dawn of age of electricity

in Karnataka.

In March, 1903 the Government of Mysore created a separate electrical department and took

over the control and management of the Cauvery Power scheme from GE Company who

erected and maintained the station for one year. Power supply was extended to Bangalore

city on 5th August 1905. Its inauguration was conducted by Sir John Hewett, member Vice

Regal Council. Power supply to Mysore city commenced on 26th November 1908. It is very

important to note that within three decades after London and New York City, Bangalore and

Mysore cities had been electrified. The construction of the Kirshnarajasagar Reservoir

assisted the growth of Shivasamudram generating station. With the assured water source at

Krishnarajasagar (KRS), the Cauvery Power scheme started generating power to its full

installed capacity. Encouraged by these facts, the Government of Mysore started negotiations

with Government of Madras for concession to utilise its portion of the water at the Cauvery

Falls and after prolonged correspondence acquired the right to utilise the whole of the water

power at the Cauvery Falls with certain conditions. These conditions are:

1. For providing summer water supply to the Shivasamudram Jahgir lands and sum of Rs. 941 per annum is to be paid to the Jahgirdar of Shivasamudram. This sum has been increased to Rs. 2823 from 1935.

2. No charge should made by the Madras Government for use by the Durbar of that Government's share of the power for five years from the date of this agreement.

139

Thereafter for a period of thirty years, for half the total power utilized, a payment of Rs. 5/HP per annum paid to the Madras Government by the Durbar with annual minimum payment of Rs. 2000.

In July 1899, the Government of Mysore came to the conclusion that it was necessary to

depute an officer of the State to proceed to Europe and America to study the latest

developments in electrical transmission of power; and form an opinion regarding tenders and

to obtain tenders for the work from leading manufactures and to arrange draft agreement for

the sale of power to the Kolar Gold Field (KGF) Mines. For this purpose, in July 1899

Captain A.J. De. Lotbiniere was embargoed. The Committee of experts was also formed to

assist Lotbiniere in all technical matters. The Committee comprised of: (1) Prof. G. Forbes-

Electrical expert (2) Prof. W.C. Unwind-Hydraulic expert (3) Capt. Jocelyn Thomson as

secretary of the Committee. Tenders from several firms in Europe and America were called

for and the tenders of M/s. Escher Wyss and Company of Zurich for hydraulic machinery and

of the General Electric Company of America for electrical machinery were accepted. The

tenders include supply of machinery, erection within 20 months after acceptance of tenders

and operation for one year.

It is a remarkable that the whole work costing over Rs. 50 lakhs was completed in two years

and power service to mines started on 6th August 1902. From the transformer station two HT

circuits of transmission line 92 miles long (with no. OB/S copper wire) transmitted power to

Kolar Gold Fields. This was the longest bulk power HP transmission line in the world. Along

transmission line, there were two-section houses - one at Kanchanalak (24 miles from

Shivasamudram) and a second scraper (34 miles from Kolar Gold Fields) useful for isolating

faulty sections of lines for examinations and repairs, when found necessary. One significant

item in the construction of this transmission line was that it was cheaper to get wood for

poles from Australia than from Mysore forests. Hence, a special type red wood called

"Jarrah" was used in the construction of the line. At the Kolar Gold Fields (KGF) end set of

transformer for stepping down from 30,500/21,200 were installed in a step down transformer

building, and power was delivered and distributed to the machines of the mines. Throughout

the plant, necessary lightening arrestors, switches, meters and safety devices were installed.

3.37 PROFILE OF KPTCL

3.37.1 History of KPTCL

140

Thus, the erstwhile Mysore State28 had the enviable and glorious position of establishing the

first major hydro-electric generating station at Shivasamudram as early as in 1902 for

commercial operation. The generating capacity of the Shivasamudram Power House

gradually increased to 42 MW in stages. To meet the increasing demand for power, the

Shimsha Generating Station, with an installed capacity of 17.2 MW was commissioned in the

year 1940 (1st Unit 18-04-1940 and 2nd Unit 15-06-1940). The power demand was ever on

the increase, for industries and rural electrification, and additions to generation became

imperative. The 1st stage of 48 MW and 2nd stage of 72 MW of the Mahatma Gandhi Hydro-

Electric Station were commissioned during 1948 and 1952, respectively. With

Commissioning of the MGHES, the transmission system was upgraded to 110 KV

System.Subsequently, the Bhadra Project, with an installed capacity of 33.2 MW, and the

Thungabhadra Left Bank Power House, with an installed capacity of 27 MW at Munirabad

were commissioned during 1964 and 1965, respectively.

The State of Karnataka, with availability of cheap electric power, and other infrastructure

facilities, was conducive for increased tempo of industrial activity. It became necessary

therefore, to augment power generating capacity by harnessing the entire potential of the

Sharavathi Valley. The first unit of 89.1 MW was commissioned on 24-01-1965 and project

was completed during 1977 with commissioning of all 10 units. The Transmission system of

the State was upgraded to 220KV with Commissioning of the Sharavathi- Shimoga- Peenya

line (S1 line) on 25-01-1965. (361 KMs). Another three 220KV lines between Sharavathi-

Shimoga- Peenya (S2, S3 & S4 line) were subsequently energised.

The first inter State 220KV line between Peenya- Singarpet (162 KMs) was also

commissioned during 1965. 220KV lines were constructed from Sharavathi to Hubli (137

KMs) during 1967. The demand for power saw a phenomenal increase in the mid sixties and

onwards with the setting up of many public sector and private industries in the State. As

power generation in the State was entirely dependent on monsoon and was subject to its

vagaries, the State Government set up a coal based power plant at Raichur. The first unit of

210MWs was commissioned on 29-03-1985. The present installed capacity of the power

plant at Raichur is 1470 MW. To augment the energy resources of the State, the Kalinadi

Project with an installed capacity of 810 MW at Nagjhari Power House, First Unit of 135

MWs was commissioned on 22-12-1979 and 100 MW at Supa Dam Power House, with an

141

energy potential of 4,112 mus per annum, were set up. The Generation, transmission and

distribution system in the State was under the control of the Government of Mysore

Electrical Department (GOMED) till the year 1957. On

01-10-1957, Karnataka Electricity Board was formed and the private distribution companies

were amalgamated with Karnataka Electricity Board. The vital parameters as on 01-10-1957

are as follows:

Generation:

Installed Capacity: 189 MWs (Shiva, Shimsha, MGHE and small Diesel Stations)

Availability: 936MU/Annum, Peak Demand-151 MWS

Table 3.29 shows consumer profile of KEBas on 1957

Table 3.30 shows network deails of KEBas on 1957

TABLE 3.30

CONSUMER PROFILE

Category No. of Consumers Consumption in

MU

Consumption in

%

Domestic 2,09,947 56.96 7.41%

Commercial 1,314 16.23 2.12%

LT Industries 10,282 105.26 13.78%

HT Industries 75 522.75 68.13%

Agricultural 11,038 20.92 2.73%

Street lights 52,946 13.66 1.78%

Others 31.55 4.11%

TOTAL 2,85,602 767.33 Source : KPTCL Office Records

142

TABLE 3.31

TRANSMISSION NET WORK

Voltage Class in

KV

Sub Stations in Nos. Transmission line in

CKMs

220KV Nil Nil

110 KV 10 1350

66KV 26 1331

33KV 24 643

Total 60 3324

Source : KPTCL Office Records

143

Till the year 1986, KEB was a profit making organization. However, in the subsequent years,

like other State Electricity Boards in the country, KEB also started incurring losses, mainly

due to the increase in agricultural consumption and due to the implementation of the socio

economic policies of the Government; the performance of the power sector was affected. To

improve the performance of the power sector and in tune with the reforms initiated by

Government of India, the Government of Karnataka came out with a general policy

proposing fundamental and radical reforms in the power sector. In its policy statement29, on

restructuring and privatization, the Govt. of Karnataka, has specifically mentioned three

priorities.

a. Ensuring that people of Karnataka have equitable access to basic and reasonably priced electricity services, with all households electrified by the year 2010

b. Providing adequate electricity to industry and commerce, to achieve economic growth.

c. Providing the kind of energy use that will not damage the environment.

The process “Reforming” the power sector was adopted in accordance with the “Accelerated

Power Development Programme” of the World Bank. Above priorities were supposed to

guide the actions taken. Karnataka’s electricity power sector is unique among the states of

India, in that it was already split in 1970, between Generation (through the Karnataka Power

Corporation Ltd.) and transmission and distribution (controlled by the Karnataka Electricity

Board), long before the unbundling of the State Power utilities commenced in other states.

However since 1987, steps have been taken by the State Government towards reform of the

power sector.

As in the case of Several SEB’s, the Karnataka utilities have been begot by problems, chiefly

with respect to financial and technical performance. Some of these have been mutually

reinforcing. For example, revenue losses due to low paying categories, inadequate collections

(including theft) and high T&D losses have resulted in low investment over the years in

transmission facilities (both new capacity and maintenance), and this has intern led to poor

performance in terms of reliability (for example number of breakdowns) and supply quality

(low voltage and frequency). This poor quality has led to the loss of remunerative consumer

segment (as several industrial and commercial consumers have turned away from the grid to

captive generation), there by powering the utilities average revenue realization.

144

145

EXHIBIT 3.4

146

ROLE OF KARNATAKA GOVERNMENT

147

148

EXHIBIT 3.5 STATUS OF KARNATAKA POWER SECTOR BEFORE REFORMS

Source : Karnataka’s Power Sector & Suggested ways Forward-2002. By Antonette D’Sa and K.V. Narasimha

Murthy, 2002. p. 6. Reform policy 1997

Financial losses (numerous

non/low paying

customers)

Insufficient investment in

system improvement and

maintenance

Poor performance poor supply,

quality breakdowns high distribution losses

Loss of remunerative

customers, poor

collection

149

CHART: 3.8

Source : V.G. Pandit, Finanacial Advisor, KPTCL, & Vasuki, Director, Dhiya Consulting Pvt. Ltd., 2010,

Bangalore, pesentation on Karnataka Power Sector Reforms – Transition Management (Finance &

Accounts areas)

150

Karnataka power reforms policy30 was announced on 30-01-1997 and the following are the objectives of power sector reform policy.

a. Attracting private investors to power sector.

b. Establishing Regulatory environment.

c. Provide incentives for energy conservation

d. Use scarce Govt. resources for other priority sector.

e. Unbundling Transmission from distribution.

f. Setting up of Independent Regulatory body to restructure & rationalize power tariff

g. Progressively reducing cross subsidy h. Protect the interest of poor & marginal consumers

3.38 KARNATAKA REFORMS ACT 1999:

Karnataka Reforms Act. 1999 enacted with effect of 1st June 1999, paving the way for

creation of KPTCL and further unbundling of distribution and supply function, transfer of

assets, liabilities and employees.

3.38.1 KARNATAKA POWER SECTOR REFORSM (TRANSITION

MANAGEMENT):

Corporatisation of KEB31

initiated in August 1999.

First Transfer Scheme including BRP approved in 1999. KPTCL and VVNL Separated in August, 1999. Anti theft law introduced in 2002 T&D activities separated and independent accounting units created reconfigured with effect from 1st June, 2002.

3.39.2 KARNATAKA POWER SECTOR REFORSM – (TRANSFER PRICING):

1. Govt. of Karnataka32 issued provisional licenses to the KPTCL for carrying out the business of Transmission and Bulk Supply and for distribution and retail supply in exercise of powers wasted in the Government under section 18(4) of the KER Act, 1999.Sub sequent KERC issued Transmission and supply licenses to KPTCL on 06-12-2000 and 7-12-2000 respectively.

2. With effect from 1st June, 2002, KPTCL was further unbundled into 5 companies (TRANSCO and 4 DISCOMs)

3. With effect from 1st April one more discom was created.

4. Govt. of Karnataka formed a SPPCC in 2005, to co-ordinate the procurement of power from different sources and allocation of power between ESCOMS.

151

5. All activities relating PPAs, short term power purchase including the verification of bills sent to ESCOMs for payment was carried out by SPPCC.

6. However, the payments in respect of purchase of energy are being made directly by ESCOMI

7. With a view to facilitate trading and co-ordination in the bidding process, for establishment of various new generation projects, and also to undertake related activities, on behalf of all ESCOMS, the SPPCC recommended formation of separate special purpose vehicle (SPV).

8. Govt. of Karnataka, vide its order dated 7th April, 2007, accorded approval to form a special purpose vehicle (PCKL : Power Company of Karnataka Limited)

9. The company was incorporated as a public limited company with an initial authorized capital of Rs. 5 crores

3.39 CHRONOLOGY OF REFORMS IN KARNATAKA POWER SECTOR

An energy Sector policy Statement2 was issued vide a Government order (No. DE99 PPC96)

dated: 30th January, 1997, in which it was stated that in order to improve operational

efficiency, in distribution and to enhance customer service, quality, the State Government

Plans to privatize the restructured distribution of operations of KEB….. Privatization would

be implemented after the Independent Regulatory commission has become fully operational.

A Government vide order no DE 99 PPC 96 Dt:31st January, 1997 constituted a committee

under the Chairman Ship of the Chief Secretary to the Government of Karnataka, to float

tenders for selection of consultants, evaluate the bids received and appoint consultants and

there after guide the consultants and monitor their performance. Karnataka Electricity

Reform Act passed in 1999.

The Government of Karnataka order (No. DE4 PSR 99) dated: 16th July, 1999 accorded

approval for incorporation of new Government Companies, known as the Karnataka Power

Transmission Corporation Limited (KPTCL) for handling the transmission and distribution

functions of KEB and Visvesvaraya Vidyuth Nigam Limited (VVNL) for handling the

KEB’s existing generating stations with its associated units.

In the Government Notification, (No. DE3 PSR 99) dated 28th August 1999; the Karnataka

Electricity Regulatory Commission (KERC) was established under the provisions of

Karnataka Electricity Reforms Act. 1999.

In the Government Notification (No. DE 11 PSR 99) dated: 11th October, 1999, the

commission has been duly constituted.

152

With effect from 1st June 2002, KPTCL’s distribution segment was split geographically into

4 Distribution companies (DISCOMS) on the basis of existing zones (with the east while

Bangalore – metropolitan and Bangalore – Rural Zones Combined). The resulting

companies.

1. The Bangalore Electricity Supply Company (BESCOM)

2. The Mangalore Electricity Supply Company (MESCOM)

3. The Hubli Electricity Supply Company (HESCOM)

4. The Gulbarga Electricity Supply Company (GESCOM)

5. Chamundeswari Electricity Supply Company (CESCOM)(Formed in April 1st 2003)

Summarised chronology of power sector reform in Karnataka State

January 1997 Karnataka Govt. Energy Sector Policy Statement - referring to future privatisation of the distribution segments; Committee under the Chief Secretary of the State to select Consultants for recommendations on restructuring and privatization

May 1999 Karnataka Electricity Reform Ordnance promulgated

July 1999 Corporatisation and unbundling of the State Electricity Board (KEB) into KPTCL and VVNL

August 1999 Karnataka Electricity Reform Ordnance passed in the Legislature (Ordnance now an Act)

October 1999 Karnataka Electricity Regulatory Commission (KERC) duly constituted

January 2000 Steering Committee under the Chief Secretary to take decisions on Consultants for the privatisation

October 2001 Consultants' report on strategy for distribution unbundling and privatisation

June 2002 Distribution unbundled into four companies according to geographical zones

153

CHART 3.9CURRENT STRCTURE OF THE POWER SECTOR IN KARNATAKA

154

155

3.40 FUNCTIONS OF KPTCL

Main objects of KPTCL is to carry on the business of Transmission,33 electrical energy for

which purpose to acquire, establish, construct, take over, erect, lay, operate, run, manage,

hire, lease, buy, sell, maintain, enlarge, alter, work and use, renovate, modernize, electrical

transmission lines and/or network through extra high voltage, high voltage, medium voltage

and low voltage lines and associated sub-stations, including distribution centers, cables,

wires, accumulators plants, motors, meters, apparatus, computers and materials connected

with transmission, distribution, ancillary services, supply of electrical energy,

telecommunication and telemetering equipment.

To undertake, for and on behalf of others the erection operation, maintenance, management

of extra high voltage, high voltage, medium voltage and low voltage lines and associated

sub-stations, equipment, apparatus, cable and wires.

As per Electricity Act 2003 KPTCL is barred from trading in power with effect from 10th

June 2005, and distribution companies have been entrusted with the task of purchasing power

from various generating companies.

As per Electricity Act 2003 under section 39(1) the functions of the State Transmission

Utility (KPTCL) shall be:

a) To undertake transmission of electricity through intra-stateTransmission system;

b) To discharge all functions of planning and co-system with-

1.Central Transmission Utility;

2.State Governments;

3.Generating Companies;

4.Regional Power Committees;

5.Authority;

6.Transmission and Distribution Licenses;

7.Any other person notified by the State Government in this behalf;

c) To ensure development of an efficient, Co-ordinated and economical system of intra-State transmission lines for smooth flow of electricity from a generating Station to Load centres;

d) To provide non-discriminatory open access to its transmission system.

156

e) Open Access has been introduced which provides for issue of license to procure power as open access customer. The Transmission loss has been worked out to be 4.26 % with banking and wheeling. Transmission requires huge investments to expand the networks, overcome the constraints and to maintain the current levels of performance.

KPTCL is headed by a Managing Director at the corporate office. MD is assisted by four

functional Directors. The Board of KPTCL consists of a maximum of twelve directors.

Karnataka Power Transmission Corporation Limited is mainly vested with the functions of

Transmission. Distribution of power in the entire State of Karnataka to consumers is by

Distribution Companies. It operates under a license issued by Karnataka Electricity

Regulatory Commission. Distribution Companies purchase power from Karnataka Power

Corporation Limited, which generates and operates major power generating projects in the

state consisting of hydel, thermal and other sources. Distribution Companies purchases

power from KPC at the rate fixed by the State Govt. from time to time.

ESCOM also purchases power from Central Government owned generating stations like

National Thermal Power Corporation Neyvelli Lignite Corporation and the Atomic Power

Stations at Kalpakkam and Kaiga. The approximate share of power from these generating

stations is around 16%.

ESCOMs serve nearly 165 lakh consumers of different categories spread all over the State

covering an area of 1.92 lakh square kilometers. KPTCL transmits power to the following

companies.

1. Bangalore Electricity supply company Ltd. (BESCOM), 2. Mangalore Electricity supply company Ltd. (MESCOM), 3. Hubli Electricity supply company Ltd. (HESCOM) and 4. Gulbarga Electricity Supply Company Ltd. (GESCOM).

They have started functioning with effect from 01.06.2002. Further, Mysore and Bangalore

Zones which were under the jurisdiction of MESCOM was separated and new distribution

company- Chamundeshwari Electricity supply corporation (CESC) was formed. These

companies are in charge of distribution of power within their jurisdiction.

3.41 MISSION STATEMENT:

The mission of Karnataka Power Transmission Corporation Limited (KPTCL) is to ensure

reliable quality power to its customers at competitive prices. The KPTCL is committed to

achieving this mission through:

157

a. Encouraging best practices in Transmission and Distribution.

b. Ensuring high order maintenance of all its technical facilities.

c. Emphasising the best standards in customer service.

To be the best electricity utility in the country, the KPTCL pledges to optimize its human

and-technical resources for the benefit of all its customers. One unit saved = Two units

generated

3.42 ORGANISATION STRUCTURE OF KPTCL

The corporate government starts with the Board. The Board provides leadership and strategic

guidance and objective judgment independent of the management of the company while

being at all times accountable to shareholders. The Board helps in shaping the vision of the

organization.

The Board consists of Board of Directors comprising of functional Directors (Directors who

are involved in the day to day functions) and Non-functional Directors. The KPTCL Board

has at present a chairman, a managing director, three functional Directors and nine Non-

Functional directors. The role of MD is to manage the business in totality on the directives

from the Board. The following Functional Directors assists the MD at the corporate office.

1. Director Technical: For all Technical related matters of the corporation. 2. Director Finance: For all financial material of the corporation. 3. Director (Admn & HRD): For all Human resources and Administration related

matters.

Following Officers assist the functional Directors:

1. Chief Engineer/ Planning and Co-ordination is in charge of planning, Technical, System improvement, load forecasting, Civil and other related issues. He is in charge of obtaining financial assistance for the projects from PFC, REC, APDRP, Management Information System and Information Technology.

2. Chief Engineer /Tendering and Procurement is looking after inviting Tenders for the construction of Sub-stations and Transmission lines and procurement of major equipments and materials.

3. Chief Engineer / TA & QC is in charge of Technical Audit and Quality Control of Works and materials.

4. Chief-Engineer / R.T & R&D:- He is in charge of activities taking place in testing commissioning and maintenance of Power transformer, Protection & relaying etc. He is also in charge of Research and Development activities under taken by KPTCL.

158

5. Chief Engineer / LDC is in charge of system operation, load management with the availability of real time data of load, load forecast, system stability, reduce outage time.

6. Director, Administration and HRD is in charge of all administrative and personal related issues.

7. Company Secretary is in charge of all company related matters such as maintaining statutory books & records, compliance with legal and procedural requirements under various enactments, preparing agenda for Board meetings and communicating Board resolutions.

8. Financial Adviser (A&R) in charge of Accounts and resources of the corporation.

9. Financial Adviser (IA) is in charge of Internal Audit of Corporation Accounts.

10. Chief Industrial Relations Officers is in charge of IR matters of the Corporation.

11. There are six Transmission Zones, each headed by the Chief Engineer, having their headquarters at Bangalore, Tumkur, Hassan, Mysore, Bagalkot and Gulbarga, for construction and maintenance of transmission lines and Sub-stations.

12. There are 13 Transmission and maintenance circles each headed by Superintending Engineer, and 84 Transmission works and Maintenance Divisions each headed by Executive Engineer.

The above officers are assisted by number of officers in the cadres ranging from Assistant

Executive Engineers to junior Engineers on Technical side and controller of Accounts to

Assistant Accounts Officers on ministerial side.

3.43 RECRUTMENT:

Recruitment is the process of searching for prospective employees, and stimulating them to

apply for the jobs, in the organization. KPTCL relies both on internal and external sources of

recruitment. Potential candidates are attracted towards the organization by advertising in

news papers, and in the website of the organization.

3.44 SELECTION:

Whenever vacancies arise in the organization, then KPTCL starts searching of the right

candidates for the right job by calling them through advertisements or selects the candidates

within the organization, by giving promotions to the junior level employees. Thus selection

process is carried out from (i) Internal Sources and (ii) External Sources.

(i) Internal Sources: By means of promoting employees to the feeder cadre after

getting specified experience.

159

Expl : Employees who had Diploma qualification (called sub-engineering) will be

promoted as Addl. Asst. Engineers after attaining experience of 5 years Selection is he

ld in the following services.

1. Engineering Services: At Asst. Engineer Cadre 2. Accounts Services: At Junior Accounts Officer Cadre 3. Personal & General Service: At Junior Personnel Officer Cadre.

On compassionate grounds to the legal heir of the bereaved employees to the cadre

depending on the qualification, but max to the cadre of sub-engineer, or office

subordinate etc.

(ii) External Sources: Selection process from the external sources involves written

examination, and interview. Employees thus selected will be kept under probation for a

period of two years.

3.45 TRAINING AND DEVELOPMENT:

KPTCL has its Corporate Training Institute at its Head Quarters, Hyderabad under the

control of CGM (HRD). Training & Development Programmes are arranged to Engineering,

Accounts and Personal & General Service employees in the following fields

i) Technical ii) Human Resource Development iii) Information Technology iv) Commercial and Accounts v) Regulatory Affairs

Induction Training Programme is provided to the newly recruited employees to

acquaint with the organization culture, procedures, rules and regulations etc.

3.46 PROMOTION POLOCY

Promotions in APTRASNCO are generally based on Seniority. All the employees

have to submit their Self Assessment, annually to their controlling officer. The

controlling officer will be awarding grade (Ranging from A to E) in Annual Appraisal

to the Management. Promotion will be given based on the Annual Appraisal Report.

3.4 7 GENERAL DISCIPLINE:

160

KPTCL has code of conduct for its employees which are to be followed by all. Betting,

gambling, Smoking, disobedient towards higher officers, pampering of files etc. attracts the

disciplinary action against the error employees.

3.48 INDUSTRIAL RELATIONS:

Industrial atmosphere in general is peaceful. There are approximately 8 nos. Associations/Unions. So far neither major strike not agitations is reported.

3.49 CLASSIFICATION OF EMPLOYEES:

Employees of KPTCL are classified as

1) Employees on Regular basis 2) Contract workers outsourced from private agency 3) Consultants such as Advocates, persons having technical expertise, Chartered

Accountants, etc. Following nature of employees are outsourced.

(i) Drivers

(ii) (ii) Data Entry Operators

(iii) (iii) Skilled and Semiskilled Persons for manning the EHT Substations

(iv) Watch and word for offices and substations

(v) (v) Security guards for EHT sub stations, stores etc.

3.5 0 WORKING HOURS:

Normally office working hours are source per day, 6 days in a week. Sunday and Second

Saturday is holiday for office going employees? Employees working in the substations will

have shift duties and individual employee will have weekly off.

Employees working in the field have to no regular timings. They have to meet the

Emergencies at any time, and hence will work round the clock in order to maintain the

continuous power supply.

3.51 PAY AND ALLOWANCES:

Pay scales are fixed to all the employees based on their cadre Employee Salary Structure

include the following

i) Pay and special pay ii) Dearness Allowance iii) House Rent Allowance iv) Family Planning Allowance

161

v) Medical Allowance vi) City Compensatory Allowance

Annual investment is sanctioned to all the employees and PG innovates (Two number) will

be sanctioned from the date of attending the qualifying examination or at the time of joining

in service.Pay Revision will take place for every 4 years and Dearness Allowance will be

enhanced for every Six months (in the months of January and July) based on the Consumer

Price Index.Travelling Allowance and Dearness Allowance is sanctioned to the employees

who will tour the various places on duty for attending O&M works and construction works, etc.

3.52. CASUAL LEAVE:

Every employee is entitled for 15 days of casual leave in a calendar year and 5 days of

optional holiday’s casual leave cannot be granted for more than 10 days at a time.

3.53 EAR NED LEAVE:

All the regular Employees will have 15 days EL for every six months in a calendar year. 15

days EL is credited to their account at the beginning of January and July. There is maximum

of 300 days an employee can have at his/her credit.

An employee can encash 15 days of EL in every year or 30 days in case the person cannot

encash in the previous year.

3.54 HALF DAY LEAVE:

Class I, II and III Employees are eligible to avail 20 days of half pay leave in a calendar year

an employee can avail. An employee can commute 240 days on medical grounds over the

entire service. But for double the commuted days will be reduced from the leave account.

Class IV employees shall have 15 days of HPL and after completion of 20 years of service

shall have 20 years of HPL in a calendar year Employees who have problem of heart, kidney

cancer etc. can avail 6 months of full pay instead of half pay unless they have leave account

in their credit.

3.55 SHIFT ALLOWANCES:

Shift allowance to the workmen doing shift duties in evening and night shifts (including

watch & ward/medical/Staff service stations/Telex Operation) shall be paid at 5% of basic

162

pay subject to minimum of Rs.10/- (Rupees Ten) per shift, under Regulation 71 of the

KEBESRs.

3.56 HOT STICK ALLOWANCE:

Hotline staffs who work on Hot Lines shall be paid “Hot Stick Allowance” of Rs.140/-

(Rupees One Hundred Forty only) per day of work on the Hot lines.

3.57 CONVEYANCY ALLOWANCE:

Conveyance allowance at the following rates shall be paid to the workmen who own,

maintain and use the particular type of vehicle, for discharging. Corporation’s work wherever

the same is admissible at present, subject to other terms and conditions mentioned in

KEBESRs.

TABLE 3.32

COVEYANCE ALLOWANCES

S.No. Description Existing

Allowance Revised Allowance

a.

Conveyance Allowance AEs, JE (only working in O&M Section and Tr. Lines and AEs in TL&SS in – charge of more than two stations).

Rs.385/- Rs.500/- Rs.1000/-

b.

Conveyance Allowance Maintenance Men/Women (O&M Section and equivalent in Tr. Lines)

Rs.140/- Rs.500/-

Source: Order No.KPTCL/B16/23050/2011-12, BANGALORE, Dt.09-09-2011 of KPTCL

3.58 SPECIAL LOCALITY ALLOWANCE:

i). Special Locality allowance shall be paid at 15% (Fifteen percent) of Basic pay subject to a maximum of Rs.500/- (Rupees Five Hundred and Fifty only) per month to the workmen and.

163

ii). Special Locality Allowance shall be paid at7.5% (Seven and a half percent) of the basic pay subject to a maximum of Rs.400/- (Rupees Four Hundred and Forty only) per month wherever admissible shall be paid.

3.57 HILL ALLOWANCE:

Hill allowance wherever admissible at percent shall be paid to the workmen at the following

rates:

TABLE 3.33

HILL ALLOWANCE a) Workmen drawing basic pay

below Rs.8,670/- per month Rs.140/- per month (Rupees One Hundred and Forty only)

b). Workmen drawing basic pay of Rs.8,671/- and above per month

Rs.195/- per month (Rupees One Hundred and ninety five only

Source: Order No.KPTCL/B16/23050/2011-12, BANGALORE, Dt.09-09-2011 of KPTCL

3.59 RETIREMENT TERMINAL BENEFITS

A). Workmen retiring from service shall be presented with a memento costing not more

than Rs.2, 200/- (Rupees Two thousand two hundred only).

B). Pensioner benefits including family pension etc shall be regulated as prevailing in the

state government from time to time.

3.60 SPECIAL LEAVE FOR CHILD CARE TO WOMEN EMPLOYEES:

Special leave for child care not exceeding 15 (Fifteen) days in a calendar year is sanctioned

to women employees. This is to be treated as Earned Leave and separate account is to be

maintained. This leave cannot be en-chased. Employees have to furnish necessary

documents to avail this leave. Unused special leave for child care lapses at the end of the

calendar year.

3.61 ACCIDENT GRANT:

a). A workman who meets with an accident while on duty is injured severely, he/she may

obtain medical treatment in any of the Hospitals as per the advice of the authorized medical

attendant, and the entire expenditure shall be met by the corporation/ESCOMs.

b). Accident grant to such hospitalized workmen shall be paid as follows:

164

i). Rs.1,00/- (Rupees One thousand One hundred only) shall be paid where the workman is hosptilised for a period up to and inclusive of seven days.

ii). Rs.1,320/- (Rupees One Thousand One three Hundred and twenty only) shall be paid in case of hospitalization for a period more than seven days.

Injury leave/Special Disability leave with full pay and allowance shall be sanctioned to the

injured workman for the entire period of his/her hospitalization and treatment.

3.62 PAYMENT OF EXGRATIA FOR FUNERAL EXPENSES:

When a workman dies while in service, the dependents of the deceased workman shall be

paid Rs.500/- (Rupees Five hundred only) to meet the funeral expenses and a wreath costing

not more than Rs.110/- (Rupees One Hundred and Ten only) shall be placed on the body of

the workman.

165

.CHART 3.10 ORGANISATIONL CHART OF

KPTCL

166

167

168

TABLE 3.34

YEAR WISE DETAILS OF EHT SUB STATIONS

COMMISSIONED FROM THE YEAR 1970-71 AND ONWARDS

(Cumulative Nos. of EHT Sub-station existing)

400 KV 220 KV 110 KV 66 KV 33 KV TOTAL TOT CAP (MVA)

0 3 26 49 55 133 1233

0 4 30 49 58 141 1632

0 4 30 52 62 148 2118

0 6 30 54 66 156 2796

0 6 30 55 67 158 3007

0 6 31 58 68 163 3087

0 6 33 60 69 168 3298

0 6 33 61 70 170 3371

0 6 36 63 72 177 3458

0 6 36 66 77 185 3571

0 6 37 70 83 196 3839

0 9 40 72 85 206 4274

0 9 41 76 90 216 4593

0 10 47 81 98 236 5166

0 10 49 91 111 261 5693

0 10 53 94 124 281 6049

0 15 57 101 131 304 6649

0 15 62 106 145 328 7099

0 15 68 109 143 335 7503

0 16 69 112 149 346 7977

0 14 59 126 71 270 8234

0 16 63 135 82 296 8879

0 17 65 143 88 313 9588

0 18 69 150 99 336 10479

1 23 72 169 110 375 12234

1 25 81 194 134 435 14051

2 26 87 201 142 458 14968

2 32 103 214 151 502 16896

2 40 115 229 167 553 18775

2 42 125 247 174 590 20219

2 45 132 255 196 630 21098

3 46 137 262 205 653 22703

3 47 147 278 216 691 23400

4 54 164 291 225 738 25693

4 55 180 305 236 780 27483.5

4 58 194 320 246 822 29605.5

4 60 218 366 262 910 32676.4

4 65 263 441 282 1055 36275.6

4 79 295 496 324 1198 42119.8

4 82 310 508 346 1250 44263.2

Source: KPTCL Office Records Sept. 2011

169

TABLE 3.35

SUBSTATIONS AND TRANSMISSION LINES AS ON 31-08-2011

Voltage Level No. of stations Tr. Line in CKMs

400 KV 4 1978.176

220 KV 88 9372.615

110 KV 321 8866.909

66 KV 536 9576.059

33 KV 370 8494.15

Total 1319 38287.909

Source: KPTCL Office Records Sept. 2011

TABLE 3.36

INTER STATE TRANSMISSION LINES

S.No. Particulars Length Voltage Line Year of

Commissioning

1 Ambewadi – Ponda (Goa)

180 CKM 220 KV DC 1991-92

2 Kadakola – Kaniyanpeta (Kerala)

112 CKM 220 KV SC

3 Sedam – Tandur (AP) 4 CKM 220 KV SC 1984

4 Yerandanahalli Hosur – Tamilnadu)

35 CKM 220 KV SC

5 Chikkodi – Mudasange

(Maharastra)

50 KM 220 KV SC

6 Chikkodi Talandage (Maharastra)

50 KM 220 KV SC

7 Alipura – Gooty (AP) 220 KV SC

8 Kohaje – Munjeswara 40 KM 110 KV SC Source: KPTCL documents 2010.

170

TABLE 3.37

TRANSMISSION LOSSES

S.No. Year % in losses (Including PGCL losses)

1 2001-02 8.83

2 2002-03 5.59

3 2003-04 4.805

4 2004-05 4.28

5 2005-06 4.33

6 2006-07 4.7

7 2007-08 4.369

8 2008-09 4.302

9 2009-10 4.202

10 2009-10 4.443

Source: KPTCL Office Records

TABLE 3.38

AVAILABILITY OF THE SYSTEM

S.No. Year Availability in %

1. 2008-09 99.65

8 2009-10 99.70

9 2010-11 99.85

10 2011-12 99.70 (projected)

Source: KPTCL Office Records

171

TABLE 3.39

LENGTH OFTRANSMISSION AND DISTRIBUTION LINES (in CKM's)

YEAR 400KV (CKM's)

220KV (CKM's)

110 KV (CKM's)

66 KV (CKM's)

33KV (CKM's)

TOTAL (CKM's)

2000-01 1457 7620 6080 6220 6634 28011

2001-02 1976 7739 6276 6310 6815 29116

2002-03 1976 7835 6530 6646 6969 29956

2003-04 1976 8281 6891 7073 7072 31293

2004-05 1978 8351 7183 7375 7176 32063

2005-06 1978 8555 7286 7484 7238 32541

2006-07 1978 8574 7474 8088 7419 33533

2007-08 1978 8682 7952 8583 7655 34850

2008-09 1978 8973 8364 9119 8072 36506

2009-10 1978 9043 8627 9261 8261 37171

Source : KPTCL Office Records

172

3.63 CHANGE MANAGEMENT INITIATIVES BY APSEB:

3.63.1 Human Resource Development

To assist in the implementation of various measures34, required for the transfer of APSEB

employees to the new entities, and for growth and development of APSEB employees, “HRD

Working Group” was formed in December 1997 as part of Reform Project Management to

plan and assist in the implementation of various HRD related aspects of reform programme.

The terms of reference of HRD Working Group Includes.

I. Estimation of Future Staffing requirements for each operational area of the new utilities.

II. Collections of Demographic data (skills, age, length of service, etc) for the existing staff.

III. Estimating surplus and deficit in personnel for each operational areas of company and for each skill.

IV. Establish productivity / industrial norms for staffing. V. Develop manpower plan for the next five years taking into account the annual

retirements and VI. Develop an environment for less career growth of the employees to increase their

skills.

3.63.2 Development of Training Programmes

Training programme was imparted only to employees at the induction level, i.e. At Junior

Lineman, Asst. Engineer, Junior Accounts Officer level, there were 5 lineman training

centers at Hyderabad, Warangal, Visakhapatnam, Vijayawada and Kakapo, and one

Corporate Training Institute at Hyderabad.

There was no regular Training Programmed for the managerial cadres or employees in

service at various other levels. Personnel at middle management or senior management level

are sponsored to attend workshops or seminars being conducted by other organizations

outside the state. It is felt that every employee in service should be trained at least for a week

once in two years to update the skills. The details of training programmes now being

conducted for different levels of persons have been obtained from M/s. Bombay Suburban

Electric Supply Ltd., Mumbai; M/s. Calcutta Electric Supply Company, Calcutta, Similar

information sought from Ahmadabad Electric Company, Power Grid Corporation, NTPC,

Tamil Nadu, Karnataka, Maharastra and Gujarat SEBs. After receiving the information,

APSEB prepared detailed plan for training and skill upgradation for the staff at various levels

with the assistance of their HRD consultants.

173

3.63.3 Communication:

GOAP and APSEB have launched a comprehensive communication campaign to address

the issues and concerns of various stakeholders regarding reform and restructuring of the

State’s Power Sector and to built public support for the reform process. The stake holders

range from APSEB employees at various levels and employee representative Unions /

Associations, to those external to APSEB such as various categories of consumers,

politicians and policy makers, technocrats, opinion leaders, general public, media etc. The

communication campaigns have been directed at educate the stake holders regarding the

rationale, objectives, benefits and the implementation process of the reform programme,

addressing their concerns and dispelling their misgiving regarding reform and restructuring.

To provide focused and dedicated support to the communication campaign launched by

GOAP, a “Communication Working Group” was constituted under the Reform Project

Management Programme. (RPMP) in 1998. The objectives and responsibilities of the

communication working group include.

I. Building awareness of the reform programme. II. Communicating the need and benefits of the reform program.

III. Communicating how the consumer can participate and help accelerate the reform. IV. Building corporate identity for the new entities in the restructured power sector and V. Building relationship with the customers.

GOAP and the management of APSEB has had a series of discussions with the employees

and employee Unions/ Associations on various employee related issues such as transfer of

personal to the new entities, service conditions in the new entities, payment of terminal

benefits, VRS etc. The cabinet sub-committee constituted by the GOAP also had a number of

meetings with the employee Unions / Associations, to address their concerns and dispel the

misgivings. During the ease meetings the booklets brought out by APSEB on reform and

restructuring of the power sector were provided. The sub-committee and the management of

the APSEB have assured the employees that there would be no retrenchment of the

employees, all welfare schemes would continue and there will be appropriate scope for skill

174

up gradation and employment growth opportunities. Except one union all other employee

Unions / Associations have entered into Tripartite Agreement with APSEB and GOAP.

The field officers of APSEB have also conducted group meetings with the employees and the

copies of the Telugu translated version of Tripartite Agreement have been provided to the

employees to ensure further confidence, and to enlist support to reforms, a video film on the

experiences of the employees of Orissa (GRIDCO) has been prepared and was screened

through cable TV network.

3.63.4 Quality of Employees Work Life

In the Tripartite Agreement35 between the GOAP, APSEB and employees Unions /

Association, following assurances given.

Whereas the employees of the APSEB are opposing such policy on the apprehensions that

their services would be retrenched resulting in loss of employment and also that their service

conditions will be adversely affected even though Government have clearly stated that such

apprehensions of employees have no place.

The terms and conditions of service up on transfer to the corporate entities such as

promotions, transfers and allowances etc. regulated by existing regulations / service rules in

vogue will be guaranteed to continue to be the same and any modifications shall be by

mutual negotiations and settlement without detriment to the existing benefits.

With regard to wage negotiations the present system of bipartite negotiations shall continue.

In the event of formation of two or more corporate entities, all the existing employees will be

absorbed in these corporate entities which would be the successor bodies to the Board. Strict

guidelines based on seniority cum work experience will be the basis for absorption of

personnel in the successor entities. The Service conditions of the personnel in the successor

entities will not be inferior to the services in the APSEB when even the newly created

corporation(s) fails to implement the above agreed points; the State Government shall take

full responsibility to get them implemented.

These assurances / protections will be suitably incorporated in the forth coming Reform’s

Act and the rules made there under.

3.64 CHANGE MANAGEMENT INITIATIVES BY KPTCL

175

KPTCL adopted the Guidelines36 contained in the National Training Policy for the Power

Sector of India. The basic philosophy on which the guide lines have been devised is:

3.64.1 TRAINING FOR ALL: Every employees has a right to receive need based training

at regular intervals to enable him / her to develop his / her potential to the maximum and

contribute his / her best to the organization.

Training will be provided in the following areas:

• Technical training and skill up gradation in - Transmission, systems technologies and operations & maintenance. - Handling critical emergencies like, cascade tripping of grid. - Energy efficiency - Power trading - Energy – Environment interface.

• Personality Development - Human values and Ethics - Attitudes and behavior - Executive and managerial skills - Integrated Personality Development - Communication skills - Developing Commercial / business out look

• Organisation Development issues - Functional Management areas. (Such as Corporate Planning, Project Management,

Financial Management, Materials Management, Human Resource Management) - Industry best practices - Total quality management - Industrial Relations as the changed scenario - Rehabilitation & Resettlement Management.

• Information Technology and computer skills - Adequate training to make the employees IT literate

• Technical Education up gradation plan - Employers shall facilitate leave and financial opportunities to employees for

acquiring higher educational qualifications. - For non qualified workmen to qualify ITI. - For ITI certificate holders to Diploma in Engineering. - For Diploma holders to Graduate in Engineering - For Engineers and Executives to acquire PG level qualifications (M.Tech., MBA,

etc.) - For Post Graduates – research work leading to Ph.D.

3.64.2 MANAGEMENT DEVELOPMENT PROGRAMMES

Exposure to now technologies, and the best practices should be encouraged. At least one long

term training programe in a career should be planned for middle and senior level officers.

176

Management development would be crucial to apex level managers of power sector to equip

them to effectively manage higher as well as changing job responsibilities.

177

TABLE 3.40

PROFIT AND LOSS ACCOUNT

SI.

No. Particulars As on 31-03-2005-

06

As on 31-03-2006-

07

As on 31-03-2007-

08

As on 31-03

09

I INCOME

1

Revenue from

Transmission of

Power 15821089274 7758700525 7659978927 7990187322

2

Revenue Subsidies

and Grants 3159100000

3 Other Income 2572292204 1910333809 2038686095 1735384438

TOTAL 21552481478 9669034334 9698665022 9725571760

II EXPENDITURE

1 Purchase of Power 12352240308 777502823 228886908 710359548

2

Generation of

Power 12720783 237760173

3

Repairs and

Maintenance 174683417 274924354 211766425 2229802528

4 Employee costs 1944604251 1659615372 2416839772 552180874

5

Administrative and

general expenses 444486675 540361781 531340748

6 Other Expenses 7381405 80374996 1171997135

Sub-Total 14936116839 3332779326 4560830988 3789317915

7

Less. Expenses

Capitalized 168479709 220314513 219696341 224120769

TOTAL 14767637130 3112464813 4341134647 3565197146

III

PROFIT BEFORE

DEPRECIATION AND

INTEREST 6784844348 6556569521 5357530375 6160374614

1

Less. Depreciation

(Net) 2099739904 2334113899 1384293112 1859576606

IV

PROFIT BEFORE

INTEREST AND

TAXES 4685104444 4222455622 3973237263 4300798008

1

Less: Interest and

other bank charges

(Net) 3747658529 3348951517 2781682398 3946

178

2

Add/Less: Net Amt.

of extra ordinary

items

3

Add/(less): Prior

period

credits(Charges) -79272818 -82215518 57259910 -126755933

V PROFIT BEFORE TAX 858173097 791288587 1248814775 227548811

1

Provision for

taxation - Current

tax 66432593 180265295 138543241

2 Fringe Benefit tax 68722589 13597335 26239485

3 Deferred tax 408466614 617058432

4

Short provision for

for I.T. - Previous

years 202962344 -145624329

VI

NET PROFIT AFTER

FIXATION 520055571 188959343 612647946 140139124

Balance of profit

brought over from

previous years 1957576683 -149751151 39208192 1561865713

2477632254

Deferred tax

adjusted 2627383405 910009575

Balance carried over -149751151

VII APPROPRIATIONS

Balance carried to

Balance sheet -149751151 39208192 1561865713 1702004837

179

TABLE 3.42 TABLE 3.43 PLANT AVAILABILITY IN % FORCED OUTAGES OF THERMAL STATIONS IN %

S.No. Year APSEB FEB S.No. Year APSEB

1 1992-93 82.44 56. 60 1 1992-93 7.46

2 1993-94 83.30 81. 20 2 1993-94 8.20

3 1994-95 85.60 86. 40 3 1994-95 6.00

4 1995-96 90.20 83. 60 4 1995-96 6.42

5 1996-97 89.00 86. 20 5 1996-97 5.90

6 1997-98 90.90 88. 70 6 1997-98 4.30

7 1998-99 85.30 90. 70 7 1998-99 10.00

8 1999-2000 89.80 87. 40 8 1999-200 5.90

9 2000-2001 89.40 87. 60 9 2000-2001 3.00

Source : Annual Report (2001-2002) on the working Source : Annual Report (2001-2002) on working

of the State Electricity Boards & Electricity of the State Electricity Boards & Electricity

Departments. Planning Commission

Departments. Planning Commission (Power &

(Power & Energy Division) May 2002. Energy

Division) May 2002. Government of India p.55 Government

of India p.56

TABLE 3.44 TABLE 3.45

PLAN LOAD FACTOR OF THERMAL STATIONS % COMMERCIAL PROFIT / LOSS (Without Subsidy)

In crores

S.No. Year Andhra Pradesh Karnataka S.No. Year Andhra Pradesh

1 1992-93 65.00 49. 40 1 1992-93 -4

180

2 1993-94 68.70 66. 90 2 1993-94 -23

3 1994-95 70.20 64. 90 3 1994-95 -981

4 1995-96 77.40 67. 70 4 1995-96 -1255

5 1996-97 78.30 70. 20 5 1996-97 -939

6 1997-98 82.00 75. 20 6 1997-98 -1376

7 1998-99 76.80 81. 60 7 1998-99 -2679

8 1999-2000 83.20 82. 30

9 2000-2001 85.40 81. 30

10 2001-2002 86.30 81. 10

Source : Annual Report (2001-2002) on the working Source : Annual Report (2001-2002) on working

of the State Electricity Boards & Electricity of the State Electricity Boards & Electric

Departments. Planning Commission

Departments. Planning Commission (Power &

(Power & Energy Division) May 2002. Energy

Division) May 2002. Government of India p.58 Government

of India p.146

TABLE 3.46 TABLE 3.47

SUBSIDY FOR AGRICULTURE CONSUMERS SUBSIDY RECEIVED FROM STATE GOVERNMENT

In crores

In crores

S.No. Year Andhra Pradesh Karnataka S.No. Year Andhra Pradesh

1 1992-93 726 497 1 1992-93 0

2 1993-94 925 668 2 1993-94 0.1

3 1994-95 1350 871 3 1994-95 944.1

4 1995-96 1748 1109 4 1995-96 1259.1

181

5 1996-97 1571 1255 5 1996-97 850.4

6 1997-98 2087 1530 6 1997-98 0

7 1998-99 2702 1535 7 1998-99 2549.2

Source : Annual Report (2001-2002) on the working Source : Annual Report (2001-2002) on working

of the State Electricity Boards & Electricity of the State Electricity Boards & Electricity

Departments. Planning Commission

Departments. Planning Commission (Power &

(Power & Energy Division) May 2002. Energy

Division) May 2002. Government of India p.147 Government

of India p.149

TABLE 3.48 TABLE 3.49

RATE OF RETURN ON CAPACITY (%) RATE OF RETURN ON CAPITAL (%)

(With Subsidy) (With Subsidy)

S.No. Year Andhra Pradesh Karnataka S.No. Year Andhra Pradesh

1 1992-93 -0.20 -2.00 1 1992-93 -0.20

2 1993-94 -0.60 -0.20 2 1993-94 -0.60

3 1994-95 -22.30 -11.40 3 1994-95 -0.80

4 1995-96 -28.80 -29.40 4 1995-96 0.10

5 1996-97 -21.80 -36.16 5 1996-97 -2.06

6 1997-98 -33.95 -16.50 6 1997-98 -33.95

7 1998-99 -100.94 -37.93 7 1998-99 -4.91

182

Source : Annual Report (2001-2002) on the working Source : Annual Report (2001-2002) on working

of the State Electricity Boards & Electricity of the State Electricity Boards & Electricity

Departments. Planning Commission

Departments. Planning Commission (Power &

(Power & Energy Division) May 2002. Energy

Division) May 2002. Government of India p.164 Government

of India p.163

TABLE 3.50 TABLE 3.51

TARIFF INCREASE REQUIRED TO TARIFF INCREASE REQUIRED TO ACHIEVE

ACHIEVE BREAKEVEN (%) 3% RATE OF RETORN

In Paise/Kwh Paise/Kwh

S.No. Year Andhra Pradesh Karnataka S.No. Year Andhra Pradesh

1 1992-93 0.20 1.50 1 1992-93 4.0

2 1993-94 1.10 0.10 2 1993-94 6.7

3 1994-95 42.50 10.30 3 1994-95 48.2

4 1995-96 59.00 38.20 4 1995-96 64.5

5 1996-97 57.58 46.71 5 1996-97 63.7

6 1997-98 73.04 28.74 6 1997-98 78.1

7 1998-99 122.37 62.07 7 1998-99 125.5

Source : Annual Report (2001-2002) on the working Source : Annual Report (2001-2002) on working

of the State Electricity Boards & Electricity of the State Electricity Boards & Electricity

183

Departments. Planning Commission

Departments. Planning Commission (Power &

(Power & Energy Division) May 2002. Energy

Division) May 2002. Government of India p.169 Government

of India p.170

TABLE 3.52 TABLE 3.53

REVENUE ARREARS RECEIVABLE BY SEBs OUT STANDING DUES PAYABL

In crores CENTRAL

SECTOR PSUs As ON 28th

Feb., 2002

(Including Surcharge) in Crores

S.No. Year Andhra Pradesh Karnataka S.No. PSU Andhra Pradesh

1 1994-95 456.9 592.0 1 REC 0

2 1995-96 456.8 671.3 2 NTPC 355.41

3 1996-97 566.7 760.1 3 NEEPCO 0

4 1997-98 566.7 760.1 4 DVC 0.30

5 1998-99 400.1 980.2 5 NHPC 0

6 1999-2000 677.7 10.25.8 6 PFC 0.24

7 PGCIL 12.70

Source : Annual Report (2001-2002) on the working Source : Annual Report (2001-2002) on working

of the State Electricity Boards & Electricity of the State Electricity Boards & Electricity

Departments. Planning Commission

Departments. Planning Commission (Power &

184

(Power & Energy Division) May 2002. Energy

Division) May 2002. Government of India p.171 Government

of India p.176

EXHIBIT 3.6 CHRONOLOGY OF REFORMS IN ANDHRA PRADESH

AND KARNATAKA S.No. Particulars Andhra Pradesh

Karnataka

1 Formation of State Electricity Board 01.04.1959 01.10.1957

2 Splitting of Electricity Board in to In 1970, (i) KPCL (Karnataka Power

Generation, and Transmission & Distribution _ Corporation Ltd) and (ii) KEB (Karnataka Electricity Board)

3 High Level Committee Report June 1995 - (Hiten Bhayya

Committee

Report)

4 State Government Polocy Statement on Power February 1997 January 1997

5 Passing of Reform bill in State Assembly April 1998 August 1999

6 Unbundling of State Electricity Board February, 1999 July 1999 (APTRANSCO and (KPTCL and VVNL)

APGENCO) 7 Establishment of Electricity March 1999 October 1999 Regulatory Commission

185

8 Unbundling of Transmission April 2000 June 2002 Corporation in to Distribution / 4 DISCOMS 4 ESCOMS Electricity Supply Companies

in 1997 another ESCOM.

Note : Ultimate aim of the reforms is to Privatize / Franchise the Transmission and Distribution wings. But could not be implemented as per the Programmed Schedule.

Source : Karnataka’s Power Sector & Suggested ways Forward : Antonette D’ Sa and KV

Narasimha Murthy 2002. p. 4 and Developments is power sector in Andhra Pradesh M. Thimma Reddy 2003 a paper presented at the Andhra Pradesh Economic Association Annual Conference.

186

3.46 PERSONAL PROFILE OF THE RESPONDENTS:

Profile of the respondents for the purpose of present study is given below. It forms a

backdrop for the study.

TABLE 3.54

AGE WISE AND COMPANY WISE DISTRIBUTION OF RESPONDENTS

S.No

Age in years

APTRANSCO KPTCL

No. of

respondents

Percentage No. of

respondents

Percentage

1 Below 30 years 20 9.7 42 19.4

2 31-40 years 60 29.1 99 45.6

3 41 – 50 year 110 53.4 35 16.1

4 Above 50 year 16 7.8 41 8.9

TOTAL 206 100.0 217 100.0

Source: Field ssurvey

Age and company wise distribution of the respondents are given in the Table 3.52. Model

age group of APTRANSCO respondents is 41-50 years and that of KPTCL is 31-40 years.

Thus it can be stated thus model age group of APTRANSCO is more than the KPTCL. The

analysis shows respondents of APTRANSCO are more aged than the respondent of KPTCL.

187

CHART 3.11

AGE WISE AND COMPANY WISE DISTRIBUTION OF RESPONDENTS

0

10

20

30

40

50

60

Below 30 years 31-40 years 41 – 50 year Above 50 year

APTRANSCO

KPTCL

Source: Field ssurvey

188

TABLE 3.55

SEX WISE AND COMPANY WISE DISTRIBUTION OF RESPONDENTS

S.No

Age in years

APTRANSCO KPTCL

No. of

respondents

Percentage No. of

respondents

Percentage

1 Male 171 83 167 77

2 Female 35 17 50 23

TOTAL 206 100 217 100

Source: Field ssurvey

From the above table it can be observed that there is Gender diversity in both organizations.

It is also observed that in both the companies’ respondents of male are more than female.

189

CHART 3.12

SEX WISE AND COMPANY WISE DISTRIBUTION OF RESPONDENTS

0

10

20

30

40

50

60

70

80

90

male female

APTRANSCO

KPTCL

Source: Field ssurvey

190

TABLE 3.56

MARITAL STATUS WISE AND COMPANY WISE DISTRIBUTION OF

RESPONDENTS

S.No

Marital Status

APTRANSCO KPTCL

No. of

respondents Percentage

No. of

respondents Percentage

1 Married 188 91.3 167 77

2 Un married 18 8.7 50 23

TOTAL 206 100 217 100

Source: Field ssurvey

From the above Table it can be observed in both the organization majority of the respondents

are married (APTRANSCO 91.3%, KPTCL 77%). Further it is found that percentage of

married respondents in APTRANSCO is more than that of KPTCL.

191

CHART 3.13

MARITAL STATUS WISE AND COMPANYWISE

DISTRUBITION OF RESPONDENTS

0

10

20

30

40

50

60

70

80

90

100

married unmarried

APTRANSCO

KPTCL

Source: Field ssurvey

192

TABLE 3.57

EDUCATION WISE AND COMPANY WISE DISTRIBUTION OFTHE

RESPONDENTS

S.No

Education

APTRANSCO KPTCL

No. of

respondents Percentage

No. of

respondents Percentage

1 Diploma 13 6.3 40 18.4

2 Graduation 89 43.2 116 53.5

3 Post-Graduation 87 42.2 51 23.5

4 Other 17 8.3 10 4.6

TOTAL 206 100.0 217 100.0

Source: Field ssurvey

It is evident from the Table 3.55 majority of the respondents in both the companies is

Graduates (APTRANSCO 43%, KPTCL 53.5%). The strength of the Post Graduate

respondents (42.2) is very slightly less in APTRANSCO when compared to graduates. But in

KPTCL the strength of Post Graduates (23.5) is almost half of that of graduates. A major

portion is with low level qualification. The growth of the organizations depends on its

learning aptitudes, values, perceptions, and ethics of employees depend to a large extent up

on the level of education. Thus it can be concluded that in both organizations employees are

educated but in APTRANSCO the Post Graduated employees are more than that of KPTCL.

193

CHART 3.14

EUDCAITON WISE AND COMPANY WISE DISTRIBUTION OF

THE RESPONDENTS

0

10

20

30

40

50

60

diploma graduation post-graduation other

APTRANSCO

KPTCL

Source: Field ssurvey

194

TABLE 3.58

EXPERIENCE WISE AND COMPANY WISE DISTRIBUTION

OF THE RESPONDENTS

S.No

Experience

APTRANSCO KPTCL

No. of Respondents Percentage No. of

Respondents Percentage

1 Less than 5 years 27 13.1 40 18.4

2 6-10 years 20 9.7 79 36.4

3 11-15 years 48 23.3 12 5.5

4 16-20 years 74 35.9 14 6.5

5 21 years and above 37 17.5 72 33.2

TOTAL 206 100.0 217 100.0

Source: Field ssurvey

From the Table 3.56 it is evident that in APTRANSCO employees having experience of 11-

15 years and 16-20 years are of the percentage of 23.3% and 35.9% where as in KPTCL the

percentage is 5.5 and 6.5. The situation is vice versa with regard to employees with the

experience of 6-10 years and 21 years and above. This it can be concluded that in

APTRANSCO, employees with moderate experience are more where as in KPTCL,

employees are having less as well as more experience and also with more experience.

195

196

CHART 4.15

EXPERIENCE WISE AND COMPANY WISE DISTRIBUTION

OF THE RESPONDENTS

0

5

10

15

20

25

30

35

40

less than 5

years

6-10 years 11-15 years 16-20 years 21 years and

above

APTRANSCO

KPTCL

Source: Field ssurvey

197

TABLE 3.59

SERVICE WISE AND COMPANY WISE DISTRIBUTION OF

RESPONDENTS

S.No

Service

APTRANSCO KPTCL

No. of

respondents

Percentage No. of

respondents

Percentage

1 Engineering 151 73.3 148 68.2

2 Accounts and Personal & General

55 26.7 69 31.8

TOTAL 206 100.0 217 100.0

Source: Field ssurvey

From the Table 3.57 it is can be stated that of employees of Engineering Service and slightly

more (73.3%) in APTRANSCO than in KPTCL (68.2%).

In case of Accounts and Personal & General Services, it is slightly less (26.7%) when

component to KPTCL (31.8%). From the above table it can be concluded that threes is not

much difference in the service wise distribution of employees.

198

CHART 3.14

SERVICE WISE AND COMPANY WISE DISTRIBUTION OF

RESPONDENTS

Source: Field survey

199

REFERENCES: 1. K.Ramachandra Murthy and K.Raghu “Article on Fifty yearsof Andhra Pradesh 2007

p.285. 2. Harban L.Bajaj and Deepak Sharma: “Article on Power Sector Reforms in India 2007

p.p.1-2. 3. Parameswara Sarma, P.S.Chandramohan nairb, R.Balu Subrmanian – “Perormance of

Indian Power Sector during a decade under restructuring” – A critique 2003 p.p.3-4. 4. A study produced by the international Energy Agency on “Electricity in India –

Providing the power for the millions 2002p.p.17-20. 5. Professor D.P.Kothari Power sector Reforms: “technological and financial perspective

IIT New Delhi, p2. 6. Indian power sector reforms, update issue I, (October 2001) Prayas,Pune (Available

www.prayas.pune.org) p.p.3-4 7. Article on India “Electricity op.cit. P.p.55-64. 8. Harsh agarwal “Article on “Opportunities and threts”the electricity Act 2003 IIM,

Bangalore p.2 9. Harban L.Bajaj and Deepak Sharma – “Paper presentation on the Indian power sector,

role of appellate tribunal 2007 p.2. 10. S.K.Khaparde “Article on “Power sector reform and restructuring in India IIT Mumbai,

electrical engineering 2008 pp2-365) 11. “Australia India “Bilateral work shop on technical and policy exchange” New Delhi 11th

February 2010. 12. K.Ramachandra Murthy and K.Raghu , op.cit p.291 13. Programme and project implementation plan vol-I main report prepared by APSEB,

Hyderabad 1998 p.p.I-4 to I-5 14. Guidelines on restricting and privatization of power sector and power tariff” Report of

the High level committee, Hyderabad April 1995 p.p.126 to 128. 15. Programme and project implementation plan vol-I main report prepared by APSEB,

Hyderabad,loc.cit 16. http//www.andhra pradesh.com 07-06-2002 17. Power sector reforms restructuring of APSEB published by public relation department

of APSEB p.p.29-31 18. Ibid p.35 19. K.Raghu, M.Thimmareddy, N.Srikumar and D.Narsimha reddy article power sector

reform in Andhra Pradesh2005 p.p.4-5 20. M.Thimmareddy paper presentation on development in power sector in Andhra Pradesh

at economic association annual conference 2003p.6. 21. www.aptransco.gov.in. 22. www.ercap.org. 23. APTRANSCO planning reports 24. Memorandum of articles of association of transmission corporation of Andhra Pradesh,

Hyderabad 1998 25. Administrative reports of APTRANSCO pp 1911-12 pp1-2. 26. Information manual of public relations office, aptransco compiled and updated up to 31-

12-2012

200

27. Ramana Reddy: “Financial management of power sector – A case study of Karnataka power transmission corporation limited” Thesis submitted to SK.University 2006 pp.75-82

28. www.kptcl.com 29. Authonette D’Sa and KU Narsimha Murthy: “Karnataka power serctor and suggested ways forward published by International Energy initiative, Bangalore, 2002 pp.4-6. 30. Tetra tech and Dhiya consulting private limited the presentation on Karnataka sector reforms, Bangalore 2010. 31. V.G.Pudit and Vasuki Dhiya consultancy Karnataka limited power sector reforms and transmission management, finance and accounts areas Bangalore, 2010. 32. Bharathies Rao and Savithri presentation on Karnataka power sector reforms – Transfer pricing Bangalore 2010. 33. www.kptcl.com 34. Andhra Pradesh Power Sector Reforms and Restructuring Programme, op.cit. pp. 4-13 35. Tripartite Agreement Govt. of Andhra Pradesh, APSEB, and APSEB Engineer’s Association-1998. 36. Order No.KPTCL/B73/5801/2007-08,Bengaluru, dt 04-10-2007.