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CS-08-025

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CS 08-025

GUJARAT ELECTRICITY BOARD’S TURNAROUND:

COMPLETE RURAL ELECTRIFICATION IN GUJARAT

Version 21/10/2008

This case was prepared by Dr. Rakesh Mohan Joshi, Indian Institute of Foreign Trade, New Delhi as a basis for classroom discussion rather than to illustrate either effectiveor ineffective handling of a management situation. The case study was supported by the

Aditya Birla India Centre at London Business School.



CS-08-025- 2 -

India’s global competitiveness had been growing rapidly1, however,infrastructure bottlenecks such as electricity, roads, railways and portsremained unsolved. Power-cuts ranging from a few hours to several days weregenerally a rule rather than an exception in many Indian cities. This had givenrise to considerable growth in the generator and inverter industry as analternative to reliance on the erratic power supply. Power generation couldhardly cope-up with the growing demand and the power situation haddeteriorated in both urban and rural areas across the country.

India’s installed capacity for power generation2 had reached 1,27,925 MW by1st January 2007 and India became the sixth largest producer and consumer of electricity in the world equalling the power generating capacity of UK andFrance combined. Given the vast population and geographical area, the

electrification rate in India of 55%, was much lower compared to even manydeveloping countries such as China, Thailand and Malaysia. There had alwaysbeen a shortage of power and the entire populace including the industrial sectorfaced the acute power shortage and frequent power cuts.

Since independence, India had adopted socialistic policies aimed at the welfareof the masses especially the unprivileged class that included the economicallyand socially weaker strata of its population. Besides, rural and agriculturaldevelopment across the country had also been the government’s priority fordual reasons: to make India self-sufficient in agricultural production and reduceits dependence on imports; and to uplift its rural masses. Inputs for agriculture

including fertilizer and electricity were provided at highly subsidised rates.Besides, subsidised power was also given to domestic consumers both in ruraland urban areas.

With the passage of time, the beneficiaries, both agricultural and domesticconsumers took it as a matter of their right not to pay for public utilitiesincluding electricity. Even if any payment was made, it was too low to recovereven the cost of production. This led to high incidence of power thefts andhuge losses at transmission and distribution. As a result, the State ElectricityBoards (SEB) which controlled almost the entire share of power generation,

accumulated heavy losses and reached the verge of bankruptcy. Inefficiency atall levels in SEBs became a widespread phenomenon and the reliability andquality of power supply was badly hit.

1 “The Global Competitiveness Report 2005-2006”, World Economic Forum, Geneva,

Switzerland (2005), pp.18-19 2 “The Global Competitiveness Report 2005-2006”, World Economic Forum, Geneva,

Switzerland (2005), pp.18-193 “Report on the performance of State Power Utilities for the years 2003-04 and 2005-06”,

Power Finance Corporation Ltd., New Delhi, 2007, pp. xiv.



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The absence of adequate, reliable and quality power crippled the industrialgrowth and the overall economic growth of the country also suffered severely.Taking decisions that have considerable potential to antagonise a substantialpart of the vote-bank was not easy in a multiparty democratic country likeIndia. Despite all this, the Indian state of Gujarat succeeded in providinguninterrupted three phase quality electricity round the clock to all its 18,065villages by November 10, 2006.

The story of the complete rural electrification of Gujarat provides a remarkablelearning opportunity to other nations and Indian states. It is an interesting storyof political will and the government’s commitment to empower its own people.How was a loss making State Electricity Board revitalised and how did that ledto transformation into one of the most efficient public utilities in the country?



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Electrification in India:

In India, the process of electrification began in the 1880s concurrent with thedeveloped world, with establishment of a small hydroelectric power station inDarjeeling. However, commercial production and distribution started about 11years after London and 17 years after New York in 1889 in Calcutta (presentlyknown as Kolkata). By the time India became independent in 1947, the countryhad a power generating capacity of 1,363 MW. The generation and distributionof electric power was carried out primarily by private utility companies such asCalcutta Electric. The availability of power was confined to a few urbancentres whereas the rural areas did not have the availability of electricity. Afterindependence, all the new power generation, transmission and distribution of power in rural and urban centres which were not served by the private

companies came under purview of government agencies, both central and state.In all the states, State Electricity Boards were formed.

Figure 1: Extent of Electrification and Population with and without electricity

8.5 0 .6 0 .6 16.2 6.7

487.2

101.271.1

18 .1

96.2

1302.1

64.124.7

66.8

13

607.6

118 .883.5

8 .945.3

99.4 99 97.8

80.5

66

55.554 54

33 32

0

200

400

600

800

1000

1200

1400

C h i n a

T h a i l a n d

M a l a y s i a

P h i l i p p i n e s

S r i L a n k a

I n d i a

I n d o n e s i a

P a k i s t a n

N e p a l

B a n g l a d e s h

Country

P o p u l a t i o n w i t h / w i t h o u t E l e c t r i c i t y ( M

i l l i o n )

0

20

40

60

80

100

120

E l e c t r i f i c a t i o n R a t e ( % )

Population without

electricity (million)

Population with

electricity (million)

Electrification rate %

Source: Based on data from World Energy Outlook, International Energy Agency, 2006



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The extent of electrification in India in 2007 was estimated to be 55.5% (Fig.1) which was much lower than many Asian countries such as China (99.4%),Thailand (99%), Malaysia (97.8%), Philippines (80.5%) and Sri Lanka (66%).Moreover India had the highest population of 487.2 million without access toelectricity. The per capita electricity consumption in India3, 606 kWh (2005),was far below the estimated world average of 2,429 kWh

The public sector in India controlled about 90% of power generation, almost allof transmission and most of the distribution except for a few pockets. Statesaccounted for about 53%, the central public sector utilities accounted for 34%whereas the private sector only for 13% of the installed power generationcapacity (as on 30.04.2007) in India4.

State government dominated the power generation in Gujarat with 54% share

of installed capacity whereas private sector accounted for 25% and centralsector for 21%. Among the top ten power generating states, Gujarat had thehighest per capita consumption of electricity of 1298.78 kWh (Figure 2),followed by Punjab (1245.23 kWh), Tamil Nadu (918.08 kWh), Maharashtra(879.09 kWh), Andhra Pradesh (764.75 kWh.) and Karnataka (660.04 kWh).

Figure 2: Per Capita consumption in Top ten Power Generating States of India

(2004-05)

879.09

1298.78

764.75

918.08

308.83

660.04583.32

413.53

515.5

1245.23

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

M a h a r a s h t r a

G u j a r a t

A n d h r a

P r a d e s h

T a m i l N a d u

U t t a r

P r a d e s h

K a r n a t a k a

R a j a s t h a n

W e s t B e n g a l

M a d h y a

P r a d e s h

P u n j a b

state

G r o s s G e n e r a t i o n

( G w h )

0

200

400

600

800

1000

1200

1400

P e r C a p i t a C o n s u

m p t i o n

( K w h )

Gross Generation Per Capita

consumption (kWh)

Source: Central Electricity Authority, General Review, 2006, pp 190-191

3 Ministry of Power, Government of India4 “Power Scenario at a Glance”, Central Electricity Authority, April, 2007, pp. 3



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Institutional Framework

The institutional framework for power generation in India was Byzantine in itscomplexity (Figure 3). The Ministry of Power was primarily responsible fordevelopment of electrical energy in India. It was responsible for perspectiveplanning, policy formulation, processing of projects for investment decision,monitoring of the implementation of power projects, training and manpowerdevelopment and the administration and enactment of legislation in regard tothermal, hydro power generation, transmission and distribution.

In all technical and economic matters, the Ministry of Power was assisted bythe Central Electricity Authority (CEA), constituted under the Electricity

(Supply) Act, 1948. The autonomous bodies (societies) i.e. Central PowerResearch Institute (CPRI), the National Power Training Institute (NPTI) andthe Bureau of Energy Efficiency (BEE) were also under the administrativecontrol of the Ministry of Power.

Besides, there were several general and transmission utilities in the centralsector. The construction and operation of generation and transmission projectsin the Central Sector were entrusted to Central Sector Power Corporations likethe National Thermal Power Corporation (NTPC), the National Hydro ElectricPower Corporation (NHPC), the North Eastern Electric Power Corporation andthe Power Grid Corporation of India Limited (PGCIL). The Power Grid was

responsible for all the existing and future transmission projects in the Centralsector and also for the formation of the National Power Grid. The PowerFinance Corporation (PFC) had been providing term-finance to projects in thepower sector. Programmes of rural electrification were provided financialassistance by the Rural Electrification Corporation (REC) under the Ministry of Power. Power trading in India was carried out by Power Trading Corporation(PTC) and National Electricity Trading Corporation (NVVNL) so as to have itsoptimal use.

Most state governments had independent power ministries. The electricity

sector in India consisted of vertically integrated State Electricity Boards mostof which had been unbundled into separate companies for generation,transmission and distribution. Private licensees for power distribution operatedin a few states only. The private sector accounted for only 13% of the totalinstalled generation capacity.

An independent appellate tribunal resolved power disputes between the states.The Electricity Regulatory Commissions Act 1998 established an independentregulatory commission at the level of the Central Government and allowedeach state to set up State Electricity Regulatory Commissions (SERCs). These



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SERCs had been primarily responsible for determining the tariff to be chargedto different classes of customers and the tariffs for inter-state transmission.

More recently, the power sector in India was governed by the Electricity Act,2003 that governed laws relating to establishment of regulatory commissions atthe central level and the state, establishment of appellate tribunals, tariff rationalisation, electricity generation, trading, transmission and distribution.Open access and competition in the generation and distribution of power hadbeen the two primary goals of the legislation. There had been serious problemsrelating to the co-ordination between the states and the central government thatled to slow pace of the reform process. However, the new Electricity Act, 2003had significantly eliminated political hindrances in the process of powerreforms. The Ministry of Power was responsible for the Administration of the

Electricity Act, 2003.

The political challenge

The competitive political appeasement by each of the political parties tosubsidise public utilities for its major vote-banks had contributed to huge lossesand growing inefficiencies in government owned public utilities. Providing freeor heavily subsidised electricity for the purpose of agriculture had not onlyresulted in huge financial losses to State Electricity Boards (SEBs), but alsofacilitated siphoning off the power to other uses. This led to loss of resourcesand most State Electricity Boards were not in a position to buy power from the

generating stations. The total commercial losses of the SEBs crossed $7.314billion (Rs. 290 billion) in 2001-02, severely affecting their financial viability.5

The poor financial position of the Gujarat Electricity Board (GEB) by 2002-03had prompted the enactment of the Gujarat Electricity Industry (Reforms andReorganisation) Act in May, 2003 whereas the central government enacted TheElectricity Act only in September, 2003 (Annexure I). The electricity andenergy portfolio was held by the Chief Minister; Narendra Modi within hisoffice at the time of enacting the act, indicating a sign of political commitmentso as to implement the bill speedily. In order to reduce GEB’s financial burdenon the state, the state Government decided to carry out significant reforms and

reduce some domestic subsidies in the electricity sector from March 01, 2003by way of an order to scrap the 25% discount on domestic consumers withmonthly demand of 100 kWh or less.

The Gujarat Electricity Act, 2003 did not directly confront the subsidisation of power for agriculture use. However, a number of measures were taken toprevent power theft and pilferage including separation of domestic lines fromagriculture use. Although the agricultural requirement was seasonal, the

5 Based on data from Power Finance Corporation, Government of India.



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subsidies provided to agricultural sector often led to power misuse and theft.Thus when Narendra Modi launched the new Jyoti Gram (Rural Lighting)initiative, he received overwhelming popular support, because villagers wereoften enthusiastic and supportive to most developmental issues, However,when it came to installing electric metres, as a pre-condition to assured anduninterrupted three phase power supply for eight hours, the farmers exhibitedconsiderable unwillingness and perceptible resistance to pay for electricitywhich was till then virtually available for free.

In a democratic country like India, populist slogans were often used by almostall the political parties while contesting elections to capture power. Once thepower had been gained and the politicians acquired statutory positions in thecountry, they were compelled to adopt pragmatic public policies. The

politicians often found themselves caught in a dilemma. On the one hand, theyhad to satisfy their mass vote bank at the grass-roots level whereas on theother, they had to convince the elite bureaucrats, professionals and multilateraldonor organisations about the financial and professional strength of theiradministrative policies. Therefore, it was an extremely delicate and strenuoustask for politicians to strike a balance between ‘populist’ and ‘reformist’measures. As a result, there existed a considerable gap between politician’sreform-rhetoric at the political level and their willingness to implement at theground level.

Organisational Restructuring of Gujarat Electricity Board (GEB):

The internal restructuring of Gujarat Electricity Board began in 1985 whenfour zonal offices were created to monitor performance and power distribution.Subsequently, these offices became an independent distribution companies.Based on the recommendations of a study conducted by the AdministrativeStaff College of India (ASCI) in 1998, the State Electricity Board of Gujaratwas trifurcated into three subsidiaries each looking after one of the three basicfunctions such as electricity generation, transmission, and distribution. Allthese companies became fully operational from April 2005 and began

conducting their activities independently. The holding company Gujarat UrjaVikas Nigam Limited (Gujarat Energy Development Co-operation Ltd.,GUVNL), monitored the activities of all these companies and ensureduniformity in certain organisational practices.

As a part of the organisational restructuring strategy, the vertically integratedutility, erstwhile Gujarat Electricity Board (GEB) was unbundled into sevenseparate companies one each for generation and transmission and fourdistribution companies and Gujarat Urja Vikas Nigam Limited (GUVNL), asthe holding company that acted as planning and co-ordinating agency in the



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sector (Annexure III). The state government committed financial support of Rs.150 billion ($3.7 billion) during the transition period and targeted an efficiencyimprovement of Rs. 100 billion ($2.46 billion).

Strategy to Manage Organisational Change:

The GEB handled the unbundling and transformation process aptly by effectiveand continued communication. Strong internal communication within theorganisation to motivate its employees towards reform resulted in theorganisational restructuring without any chaos. The meticulously plannedinternal communication included weekly meetings with senior management,identification and implementation of key performance indicators andmonitoring revenue collection as a part of the key components of the newstrategy. Volunteers were identified and appointed as ‘Reform Champions’ in

order to create a sense of ‘ownership’ of the reform process and understand thereasons behind the change. Their sensitisation to the reform and traininggenerated a healthy competition between different divisions and brought out apositive attitudinal change in the work force. About 43,000 out of 50,000 totalemployees were given special training by the end of 2005-06 so as to bringabout smooth transition.

The employees’ unions/associations often opposed any initiative to restructurethe organisation and posed a considerable challenge to the reform process. Atripartite agreement was signed between the state government, the erstwhileGEB and the 7 unions/associations of the GEB. In the initial stages of

unbundling, a ‘Reform Progress Management Group’ was created withrepresentations from various functional areas such as human resources,finance, engineering, transmission and distribution. This group was primarilyresponsible for maintaining relations between the different companies andresolving human resource issues. They were also responsible for working onfinancial improvement plans in the implementation and monitoring of theunbundling process. Achieving efficiency in power generation andtransmission became the core vision statement of the generating andtransmitting utilities in Gujarat and emphasis was laid on customer satisfactionthrough service excellence in the four distribution companies.

Reduction in Transmission and Distribution (T&D) Losses:The measures taken to control the T&D losses included a stringent Anti-TheftBill to check the theft. A senior police officer was initially made responsible tocheck thefts with 70 installation checking squads in the distribution companies.Based on the consumption patterns of the feeders, theft prone areas wereidentified and massive anti-theft drives were organised with the help of policesquads. The cases of theft declined considerably by 29% from 107,985 in2003-04 to 77,068 in 2006-07. Besides, 8.3 million connections were checkedover the four year period. .



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Systems improvement had also been the key focus of the distributioncompanies. All new installations had been provided with sealed Metal MeterBoxes (MMBs) which made them theft proof. Other theft control measuresincluded replacement of joints in the service cables and meters, sealing of connections, movement of distribution transformers, renovation of conductorsand automated meter reading.

35.9

30.9 30.64

26.9

21.5

0

5

10

15

20

25

30

35

40

T & D L o s s ( i n

P e r c e n t a g e )

2 0 0 2

- 0 3

2 0 0 3

- 0 4

2 0 0 4

- 0 5

2 0 0 5

- 0 6

2 0 0 6

- 0 7

Year

Figure 4: Remarkable Reduction in Transmission and Distribution (T&D)

Losses

Source: based on Data from GUVNL (Gujarat Urja Vikas Nigam Ltd.; Gujarat Energy

Development Corporation Ltd.)

The comprehensive measures led to about 15% reduction in T&D Losses6 in aspan of four years from 35.9% in 2002-03 to 21.5% in 2006-07 as indicated inFigure 4. In three of the four distribution companies in Gujarat the T&D losses

touched 15% by 2006-07.

Technical Improvements:

The state of Gujarat upgraded sub-transmission and distribution (S&D)systems, under the central government’s Accelerated Power Development andReform Programme (APDRP). As a result, reliability of power in most of theten APDRP circles in Gujarat had improved to 99%.

6 Based on data from Government of Gujarat



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Use of Information and Communication Technology (ICT):

Gujarat was credited to be the first state in the country to implement a full-fledged ERP solution in the power sector so as to provide end to end ITsolutions. ERP provided connectivity between all the business units in all thecompanies for real time data transfer and updation to ensure close monitoringto remove discretion and improve business process. The ERP system,christened as ‘e-urja’ (e-power), involved a seamless flow and processing of data resulting in real time information availability and therefore, facilitateddecision-making. A state of the art ‘Data Centre’ had also been created so as toserve as the data bank for GUVNL and its subsidiaries.



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Impact of GEB’s Turnaround:

The comprehensive measures taken to turnaround Gujarat Electricity Boardinto different entities for power generation, transmission and four regionaldistribution companies led to considerable reduction in the Transmission andDistribution (T&D) Losses, remarkable reduction in cost to serve consumersand technical improvements. As a result, there had been remarkable growth inrevenues and improvement in cash flows. A loss making public utility had beenable to achieve financial turnaround without any significant increase in powertariffs.

Cost Reduction:

The cost to serve the consumers had come down from Rs. 4.15 ($0.10) per unitin 2003-04 to Rs. 3.63 ($0.08) per unit in 2006-07 whereas the averagerealisation, on the other hand, had gone up from Rs. 3.49 ($0.08) to Rs. 3.70($0.09) in the same period. Thus, the deficit of Rs.0.66 ($0.01) per unit in2003-04 was turned around to a surplus of Rs. 0.06 ($0.001) per unit in 2006-07. Moreover, the power purchase cost declined from Rs. 2.59 ($0.06) per unitin 2000-01 to Rs. 1.99 ($0.04) in 2005-06 as depicted in Fig. 5.

0

0.5

1

1.5

2

2.5

3

R s . P e r U n i t

2 0 0 0 - 0 1

2 0 0 1 - 0 2

2 0 0 2 - 0 3

2 0 0 3 - 0 4

2 0 0 4 - 0 5

2 0 0 5 - 0 6

Years

Figure 5: Re duction in Power Purchase Cost(Rs. Per Unit)





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Growth in Revenues:

Innovative ways to enhance cash collection included use of post offices and tieups with banks, use of mobile collection vans, increasing operative hours of thecash collection counters and customer friendly initiatives with internal targetsat the field level. This led to increase in total cash collection by 43% from Rs.91.76 billion ($2.26 billion) in 2003-04 to Rs. 131 billion ($3.23 billion) in2006-07 (Fig. 6).

69.84

5.82

76.2

6.35

89.88

6.99

91.76

7.65

102.04

8.5

115.06

9.59

131.01

10.92

0

20

40

60

80

100

120

140

C a s h C o l l e c t i o n ( R s .

i n

b i l l i o n )

2 0 0 0

- 0 1

2 0 0 1

- 0 2

2 0 0 2

- 0 3

2 0 0 3

- 0 4

2 0 0 4

- 0 5

2 0 0 5

- 0 6

2 0 0 6

- 0 7

Years

Figure 6: Post-reforms Revenue Growth of GEB

Cash Collection Cash collection Per Month





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Financial Turnaround without any Significant Increase in Power Tariffs

Power tariffs in India were cross subsidised. That is, industrial and commercialconsumers were charged above the cost of supply and agricultural anddomestic consumers below the cost of supply. An inter-state comparison of power tariffs as given in Figure 7 revealed that Gujarat had the second highestaverage power tariffs for domestic consumers among the top ten powergenerating states.

In Gujarat, the average industrial tariffs and average commercial tariff waslower than the average tariffs for the top ten power generating states. Theaverage agricultural tariff in Gujarat was among one of the lowest in top tenpower generating states in India.

Figure 7: Sector-wise Powe r Tariff in Top 10 Power Generating States of India (March 2007)

870.83

791.54 773.24

577.31

160.00

57.750.00 0.00

381.61

1152.45

201.92

375.79365.68 343.35

200.00

76.30147.00 90.00

25.00

269.00

462.43

1034.73948.38

507.84

487.62

453.85

605.82

372.02

837.19

403.04407.26

645.82631.59

555.65

620.66547.17

143 2.19

606.63

490.41 469.30

0

200

400

600

800

1000

1200

1400

K a r n a t a k a

G u j a r a t

M a d h y a

p r a d e s h

R a j a s t h a n

W e s t B e n g a l

M a h a r a s h t r a

A n d h r a

P r a d e s h

U t t a r P r a d e s h

P u n j a b

T a m i l N a d u

A v e r a g e T a r i f f ( p a i s e / k w h )

0

200

400

600

800

1000

1200

1400

1600

A v Domest ic* A v A gricult ure** A v Indust ry*** Av Co mmercial****

Source: On the basis data from Central Electricity Authority, 2007

The financial turnaround achieved in the Gujarat Electricity board was withoutany significant increase in power tariffs in last six years (Table 1). On thecontrary, power tariff for domestic consumers was lowered by 22.2% in July,2004.



CS-08-025- 15 -

Table 1: Power Tariff Rise in Gujarat

Date of Tariff Rise (in %)Category 16.11.1990 23.01.1992 21.5.1993 21.10.96 10.10.2000 21.07.2004 01.04.2006

Residential 11.08 14.47 0.00 0.00 9.78 -22.20 1.13

Commercial 33.89 25.54 19.74 0.00 13.37 0.00 6.80

LT Industrial 13.45 10.28 13.06 30.00 14.20 0.89 0.43

HT Industrial 14.94 3.50 10.97 30.00 4.77 0.21 0.00

Public Lighting 0.00 0.00 0.00 0.00 10.42 0.00 0.00

Railway Traction 30.62 11.10 19.73 30.00 3.77 0.00 0.00

Agricultural 0.00 0.00 103.96 0.00 276.86 0.00 0.00



Overall Financial Turnaround:

Gujarat Electricity board that incurred losses of Rs. 19.32 billion ($0.47billion) in 2003-04 was transformed into a profit making company with theprofit of Rs. 2.5 billion ($0.06 billion) in 2006-07 as indicated in Fig. 8. Cashcollection improved considerably from Rs. 7.65 billion ($0.188 billion) in2003-04 to Rs. 10.92 billion ($0.26 billion) in 2006-07.

-19.32

-9.27

2.03 2.5

-20

-15

-10

-5

0

5

P r o f i t / L o s s ( R s . i n B i l l i o n )

2

0 0 3 -

0 4

2

0 0 4 -

0 5

2

0 0 5 -

0 6

2

0 0 6 -

0 7

Years

Figure 8: Financial Turnaround of Unbundled Gujarat Electricity

Board (GEB)



Strategy to achieve Complete Rural Electrification in Gujarat:

It was hard for most to believe that it was possible to achieve complete ruralelectrification in the state. However, the mission gained momentum once a



CS-08-025- 16 -

pilot project was implemented in 30 villages in the first year. Considerableefforts had to be made to market the idea of rural electrification to variousstakeholders in terms of likely benefits. What is interesting about Gujarat’sefforts in this direction are their holistic nature – going beyond electricityrelated issues to the root causes of power losses and inefficient consumption.The government of Gujarat adopted a comprehensive four-pronged strategy todeal with the problem of total rural electrification:

Sujalam-Sufalam (Water Harvesting) Scheme:

To improve the surface water situation through construction of check-dams anddeepening of existing tanks so that the farmers would not require energy todraw water but could use surface water instead. This would not only provide apermanent solution to the water problem to the draught prone areas butsubstantially help in power conservation.

Drip Irrigation Scheme:

In order to conserve energy, under the ambitious Drip Irrigation Scheme,80,000 hectares of land was assigned for the purpose of drip irrigation tofarmers who would be given land and grant of 50% to encourage towards dripirrigation. It was likely to cut down agriculture demand for power and reducethe farmers’ dependence on power supply.

Mass awareness drives for energy conservation:

The awareness drive involved numerous agencies involved in energyconservation workshops, seminars, exhibitions and live demonstration. Energyaudit of industries and use of capacitors were promoted to give impetus to thisscheme. Even the schools were roped in so as to ‘catch them young’ andsensitise them to the future energy issues.

Jyotigram Yojana (Rural Lighting Scheme):

The unique scheme, Jyotigram Yojana promised 24 hour continuous threephase quality power supply to every village in Gujarat. Under this scheme

agriculture consumers were supplied continuous power from dedicatedagricultural feeders for eight hours each day. The remaining rural load thatincluded domestic, commercial and industrial consumers was supplied threephase power for 24 hours. Under this scheme 18,065 villages had been coveredand were getting 24 hours power. Remaining 132 villages were being providedelectricity through solar electrification. The scheme was implemented in a spanof 2.5 years with an outlay of Rs. 11 billion ($0.27 billion).

As a part of rural electrification scheme, the load for agriculture had beensegregated from the existing rural feeders whereas new Jyotigram Feeders hadbeen laid down to cater to the load of villages. This had significantly



CS-08-025- 17 -

contributed to reduction of losses from electricity to rural consumers. Thetechnology employed had an in-built mechanism for preventing theft.However, the rural consumer paid the same per unit cost of electricity as thosein urban areas.

Conclusion

1. Despite rapid economic growth, the electrification rates in Indiaremained miserably low and a sizable rural population did not haveaccess to electricity. Use of public funds in the power sectors provideda pathway for the elected people’s representatives to interfere in thefunctioning of state electricity boards. This however led to such

widespread inefficiency and deep rooted corruption in their functioningthat the State Electricity Boards were on the verge of financialbankruptcy. Any reformist measures that affected any of thestakeholders, both legitimate and illegitimate alike were likely to haveconsiderable political repercussions. Against this backdrop, the reformsin electricity generation and distribution enacted in Gujarat wereremarkable. The vision, strategic planning and the commitment shownin Gujarat had been exemplary and it might serve as a role model notonly for other states in India but also for other developing countries.



CS-08-025- 18 -

Fig. 3Institutional Framework for Power in India

Central Sector

GeneratingUtilities,(NTPC,NHPC,NEEPCO,NPCIL)

Transmission

Utility,(Powrgrid)

RLDC

Finance(PFC)

RuralElectrification (REC)

Authorities(CEA, REBs)

R & D(CPRI,NPTI,PSTI)

MegaIPPs

AppellateTribunal

Ministry of Power,Government of India

IndependentCERC

IndependentSERC

Power Ministries,State Governments

TradingCompanies

PTC India

NVVNL

State Sector

Generation

Transmission

Distribution

PrivateDISCOMS

StateIPPs



CS-08-025- 19 -

Annexure I

POWER REFORM PROCESS IN GUJARAT

May, 2003 Gujarat Electricity Industry (Reorganisation &

Reorganisation) Act, 2003 enacted by Government of

Gujarat

September, 2003 The Electricity Act, 2003, enacted by the Central

government

September, 2003 Formation of Distribution Companies

October, 2003 Tripartite Agreement November, 2003 Transfer Scheme

December, 2003 Communications Strategy begun, Interface Metering

March, 2004 Model Inter-se Agreements

May, 2004 Options Process Begun

June, 2004 Second Tariff Order

December, 2004 Financial Restructuring Plan (FRP) Submitted to the

Government, GUVNL Formed, March, 2005 MoU entered between the GUVNL companies

April, 2005 Operationalisation of companies, FRP Committee

Formation

September, 2005 Option Process Completed

January, 2006 FRP approved

January, 2006 Third Aggregate Revenue Requirement (ARR) filing;

Tariff petition May, 2006 Third Tariff order

November, 2006 Complete electrification achieved

Source: based on information from GUVNL (Gujarat Urja Vikas Nigam Ltd.; Gujarat Energy




CS-08-025- 20 -

Annexure II

MAJOR PLAYERS IN POWER SECTOR IN GUJARAT

Public Sector Private SectorGeneration Gujarat State Electricity Corp. Ltd.

(GSECL)Gujarat Industries Power Co. Ltd.(GIPCL)Gujarat Mineral Development Corp.(GMDC)Gujarat State Energy Generation Ltd.

(GSEG)

Torrent Power Generation Ltd.(TPGL)Gujarat Paguthan Energy Corp.Pvt. Ltd. (GPEC)Essar Power

Transmission Gujarat Energy TransmissionCorporation Ltd. (GETCO)

Distribution Power PurchaseGujarat Urja Vikas Nigam Ltd.(GUVNL)

Power DistributionUttar Gujarat Vij Co. Ltd. (UGVCL)Dskshin Gujarat Vij Co. Ltd.(DGVCL)Pachim Gujarat Vij Co. Ltd. (PGVCL)Madhya Gujarat Vij Co. Ltd.(MGVCL)

Torrent Power (Ahemdabad &Surat)

Source: based on information from GUVNL (Gujarat Urja Vikas Nigam Ltd.; Gujarat Energy




CS-08-025- 21 -

Annexure III

List of Abbreviations

APDRP Accelerated Power Development & Reforms Programme

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

CPRI Central Power Research Institute

DGVCL Dakshin Gujarat Vij Company Limited (South Gujarat Electricity

Company Ltd.)

GDP Gross Domestic Product

GEB Gujarat Electricity Board

GETCL Gujarat Energy Transmission Corporation Limited

GIS Geographical Information Systems

GKWh Giga Kilo Watt hour

GSECL Gujarat State Electricity Corporation Limited

GUVNL Gujarat Urja Vikas Nigam Limited (Gujarat Energy Development

Co-operation Ltd.)

HT High Tension

IPPs Independent Power Producer

KW Kilo Watt

KWh Kilo Watt hour

LT Low Tension

MGVCL Madhya Gujarat Vij Company Limited (Central Gujarat Electricity

Company Ltd.)

MMBs Metal Meter Boxes

MOP Ministry of Power

NEEPCO North Eastern Electric Power Corporation

NHPC National Hydroelectric Power Corporation



CS-08-025- 22 -

NPCIL Nuclear Power corporation of India limited

NPTI National Power Training Institute

NTPC National Thermal Power Corporation

NVVNL National Vidyuth Vyapar Nigam Limited (National Electricity

Trading Corporation Ltd.)

PFC Power Finance Corporation

PGVCL Paschim Gujarat Vij Company Limited (Central Gujarat Electricity

Company Ltd.)

PPA Power Purchase Agreement

PSTI Power System Training Institute

PTC Power Trading Corporation

DISCOM Distribution Companies

REBs Regional Electricity Boards

REC Rural Electrification Corporation

RES Renewable Energy Sources

RLDC Regional Load Dispatch Centre

S & D Sub-transmissions & Distribution

SEBs State Electricity Boards

SERC State Electricity Regulatory Commission

T & D Transmission & Distribution

UGVCL Uttar Gujarat Vij Company Limited (Central Gujarat Electricity

Company Ltd.)

USAID US Agency for International Development



CS-08-025- 23 -

Annexure IVTransformation by Complete Rural Electrification



CS-08-025- 24 -



CS-08-025- 25 -

Annexure V

Power Map of Gujarat

gujarat electricity board rakesh mohan

Documents