Analyze the Environment in Which Power Discoms Operate in Delhi?

Q: Analyze the environment in which power discoms operate in Delhi?

Sol: For the above purpose, TPDDL is taken into consideration. The various environmental factors related to it are as stated below.

Basically, environment refers to all the actors and forces influencing the company’s ability to transact business effectively with its target market. It can be further categorized into Microenvironment (Forces close to the company that affects its ability to serve customers) and Macroenvironment (Larger societal forces that affect the whole economy). Microenvironmental Factors include; Company, Competitors, Market, Marketing Intermediaries, Suppliers & Publics whereas Macroenvironment comprises of factors such as; Demography, Economic, Socio-Culture, Natural, Political-Legal & Technological. Now let’s analyze each of them in detail.

MICROENVIRONMENTAL FACTOR : COMPANY

INTRODUCTION

The Delhi Model of Public Private Partnership (PPP) in Distribution is probably one of the very few PPP successes in the Indian infrastructure space, and definitely the only one so far as the Power Distribution is concerned.

It is in July 2002 that the Government of Delhi, after unbundling and corporatization of the erstwhile Delhi Vidyut Board (State owned vertically integrated Electricity Board) constituents (Generation, Transmission, Distribution), formed a 49%:51% Joint Venture Company, Tata Power Delhi Distribution Limited (TPDDL) (then known as North North West Delhi Distribution Company Limited which was subsequently renamed as North Delhi Power Limited), with the objective of improving quality of service to its consumers, making electricity available at competitive prices and improving operational efficiencies – in short, making the Sector self-sustainable , which had hitherto be making large losses.

MANAGEMENT

At the very top, the responsibility for leadership rests between the JV partners, that is, the Government of Delhi and Tata Power. Since inception, TPDDL has believed in the concept of “Distributed Leadership”. The entire operational area is divided into 5 circles, 12 districts and 46 zones and senior officers have been appointed and empowered to run these as individual business units. Competition amongst them has been institutionalized through creation of Performance Scorecards and its regular review and monitoring. Both Reward & Recognition as well as knowledge sharing platforms have been established to recognize the best performers and to replicate the best practices with agility across the remaining work units.

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FINANCE

The electricity distribution system inherited by TPDDL from the erstwhile Delhi Vidyut Board was in an extremely dilapidated condition resulting in unreliable power supply to consumers due to frequent breakdowns. Thus, a total revamping of the system was required. To meet this Capital Expenditure was made. The funding for the capital expenditure was done through:

• Consumer Contribution towards capital costs
• Internal Accruals – Depreciation to the extent there were no loan repayments
• Retained Earnings – Undistributed Profit
• Debt from Financial Institutions and Commercial Banks

In the initial years the funding has been more through internal accruals as the management consciously decided that there would be no dividend pay-out till the AT&C Loss are brought down to acceptable levels. The Capex (Cumm.) on March 2018 was 1060 Mn USD as compared to that of 187 Mn USD in July 2002 (% change = +467%)

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CABABILITIES

After taking over the electricity distribution business from erstwhile Delhi Vidyut Board, one of the major operational challenges in front of TPDDL was to improve the reliability of power supply. The entire inherited network was in an extremely dilapidated condition resulting in frequent blackouts and brownouts. The above situation called for an immediate network revamp and institutionalization of maintenance practices to ensure that reliability of supply to consumers can be maintained. Various initiatives undertaken by TPDDL to improve the reliability situation in its area of operations are highlighted below:

• CAPEX Program of Approx. Rs. 3000 Crores (All Substations have been revamped; State of the art Package Sub-stations have been introduced; Low Tension Aerial Bunched Conductors (LT ABC) & High Voltage Distribution Systems (HVDS) has been introduced.)
• Decentralization of O&M.
• 24x7 Mobile Maintenance & Breakdown crew with dedicated vehicles.
• Introduction of Outsourcing (Annual Maintenance Contract) Concept in labor intensive activities.
• Network & Process Automation interventions.
• State of the Art Ring Main Units have been installed.
• Call center has been strengthened.
• SMS based system for quicker functioning.

The table below will provide better information of the firms’ parameters over the years:

MICROENVIRONMENTAL FACTOR : COMPETITORS

The distribution of power in Delhi has been handed over to Private companies. These are joint venture companies having majority stake (51%) of Pvt. Players and 49% of Govt. of Delhi. The power distribution in other two municipalities i.e. NDMC and MES respectively remains with Govt. Accordingly the distribution function is taken care of by following companies/ bodies: