BLACKED OUT: Despite the claims, Delhi was subjected to power cuts

"Delhi is the focus of power reforms in the country. Its success is crucial." Suresh Prabhu, Union Power Minister

The end of June is eagerly awaited in Delhi. That's when the monsoon normally arrives in the capital, bringing with it a much needed respite from the unforgiving heat. This year, Delhi was looking forward to July 1 for another reason. That day, two private power companies-BSES and Tata Power-were to take over the distribution of power in the capital from the Delhi Vidyut Board (DVB).

But Delhiites who were expecting deliverance from long power cuts and poor service were in for a rude shock. Hours after the private companies took charge, there were unexpected power cuts across the city. Since then, the capital has faced loadshedding of up to six hours every day.

Many, including Delhi Chief Minister Sheila Dikshit, feel this is the handiwork of DVB employees who want the privatisation move to fail. But Tata Power Vice-President Mohan Gurunath has ruled out sabotage. "The hot and humid weather pushed up the demand, causing the crisis," he says.

Indeed, the late arrival of the monsoon is a major factor. In the past week, the peak demand in Delhi shot up to 2,800-3,000 MW (as against the normal 2,500 MW). The situation was aggravated by the shutting down of the Moradabad-Lucknow line which supplies 100-150 MW to Delhi. Moreover, despite the Rs 500 crore annual investment in its maintenance and upkeep, DVB's distribution network is overloaded and weak. With annual power theft of Rs 1,200 crore and accumulated losses of Rs 22,000 crore, the board has not been able to find the money to overhaul it.

States

PRIVATE WAR » Power distribution in Delhi handed over to BSES and Tata Power from July 1. » Past DVB losses amounting to Rs 22,000 crore transferred to a new company. » Power losses to be cut by at least 17 per cent in five years from 52 per cent at present. » Rs 3,450 crore loan to prevent immediate hike in the electricity tariff. » All DVB staff to be retained, some of whom are allegedly sabotaging privatisation. » Possibility of a reduction in power tariff after 3-5 years.

But a more critical issue was of manpower. A week before the private companies took over, the Delhi Government transferred 2,000 DVB workers to different locations in the city to effect a long pending rationalisation. The sudden change caused confusion and apprehensions among employees. Some contractual workers did not report to work after July 1, resulting in complaints piling up. "We have clarified that all contracts ending June 30 have been extended by six months," says BSES CEO J.P. Chalasani. But both companies realise that changing the staff's attitude will be their toughest challenge.

The poor beginning made by the private sector in Delhi has alarmed many reform enthusiasts. The private sector is doing a fairly good job at supplying power to Mumbai, parts of Maharashtra and Kolkata. However, the privatisation of distribution in Orissa faced difficulties because of faulty projections of the transmission and distribution losses. After losses shot up, foreign power major AES Corporation ran into problems with the state Government last year. That is why Delhi is being seen as an important milestone. "Delhi is the focal point of power reforms across the country," says Union Power Minister Suresh Prabhu. How the private sector manages the Delhi crisis will define its success in states like Uttar Pradesh, Madhya Pradesh and Andhra Pradesh, where privatisation is in various stages of implementation.