Competitive Structure

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    1. POWER SECTOR IN INDIA

    The process of electrification commenced in India almost with the developed world, in the 1880s,

    with the establishment of a small hydroelectric power station in Darjeeling. However, commercial

    production and distribution started in 1889, in Calcutta (now Kolkata). In the year 1947, the country

    had a power generating capacity of 1,362 MW. Generation and distribution of electrical power was

    carried out primarily by private utility companies such as Calcutta Electric. Power was available

    only in a few urban centers; rural areas and villages did not have electricity. After 1947, all new

    power generation, transmission and distribution in the rural sector and the urban centers (which wasnot served by private utilities) came under the purview of State and Central government agencies.

    State Electricity Boards (SEBs) were formed in all the states. Legal provisions to support and

    regulate the sector were put in place through the Indian Electricity Act, 1910. Shortly after

    independence, a second Act - The Electricity (Supply) Act, 1948 was formulated, paving the way

    for establishing Electricity Boards in the states of the Union.

    In 1960s and 70s, enormous impetus was given for the expansion of distribution of electricity in

    rural areas. It was thought by policy makers that as the private players were small and did not have

    required resources for the massive expansion drive, the production of power was reserved for the

    public sector in the Industrial Policy Resolution of 1956. Since then, almost all new investment in

    power generation, transmission and distribution has been made in the public sector. Most of the

    private players were bought out by state electricity boards. From the installed capacity of only1,362mw in 1947, has increased to 97000 MW as on March 2000 which has since crossed 100,000

    MW mark India has become sixth largest producer and consumer of electricity in the world

    equaling the capacities of UK and France combined. The number of consumers connected to the

    Indian power grid exceeds is 75 million.

    India's power system today with its extensive regional grids maturing in to an integrated national

    grid, has millions of kilometers of T & D lines criss-crossing diverse topography of the country.

    However, the achievements of India's power sector growth looks phony on the face of huge gaps in

    supply and demand on one side and antediluvian generation and distribution system on the verge of

    collapse having plagued by inefficiencies, mismanagement, political interference and corruption for

    decades, on the other. Indian power sector is at the cross road today. A paradigm shift is in

    escapable- for better or may be for worse.1.1. EMERGENCE OF REGIONAL POWER SYSTEMS

    In order to optimally utilise the dispersed sources for power generation it was decided right at the

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    beginning of the 1960s that the country would be divided into 5 regions and the planning process

    would aim at achieving regional self sufficiency. The planning was so far based on a region as a unit

    for planning and accordingly the power systems have been developed and operated on regional

    basis. Today, strong integrated grids exist in all the five regions of the country and the energy

    resources developed are widely utilised within the regional grids.

    Presently, the Eastern & North-Eastern Regions are operating in parallel. With the proposed inter-

    regional links being developed it is envisaged that it would be possible for power to flow any wherein the country with the concept of National Grid becoming a reality during 12th Plan Period.

    1.2. GENERATION

    India has installed power generation capacity of 1,41,079.84 MW as on January 31, 2008, which is

    about 100 times the installed capacity of 1362 MW in the year 1947. Power generation has

    showcased a robust growth rate which is steadily improving year after year. There has been

    significant improvement in the growth in actual generation over the last few years. As compared to

    annual growth rate of about 3.1% at the end of 9th Plan and initial years of 10th Plan, the growth in

    generation during 2006-07 and 2007-08 was of the order of 7.3% and 6.33% respectively.

    The electricity generation target for the year 2008-09 has been fixed at 744.344 BU comprising of

    631.270 BU thermal; 118.450 BU hydro; 19.000 BU nuclear; and 5.624 BU import from Bhutan.

    Abbreviation:SHP = Small Hydro ProjectBG = Biomas GasfierBP = Biomass Power

    U & I = Urban & Industrial Water PowerRES = Renewable Sources.

    Table.2: Gap Between Demand And Supply Of Power

    Source: http://www.indexmundi.com/India/electricity_production.html

    The table shows the average shortage of electricity in India every year to be approximately between

    7-8%.1.2.1. STRATEGIES

    The various strategies followed to achieve the goal in power sector are,

    Power Generation Strategy with focus on low cost generation, optimization of capacity utilization,

    controlling the input cost, optimization of fuel mix, Technology up gradation and utilization of

    Nonconventional energy sources Transmission Strategy with focus on development of National

    Grid including Interstate connections, Technology up gradation & optimization of transmission cost.

    Distribution strategy to achieve Distribution Reforms with focus on System up gradation, loss

    reduction, theft control, consumer service orientation, quality power supply commercialization,

    Decentralized distributed generation and supply for rural areas.

    Regulation Strategy aimed at protecting Consumer interests and making the sector commercially

    viable.Financing Strategy is to generate resources for required growth of the power sector.

    Conservation Strategy to optimize the utilization of electricity with focus on Demand Side

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    management, Load management and Technology up gradation to provide energy efficient

    equipment gadgets.

    Communication Strategy for political consensus with media support to enhance the general public

    awareness.

    To achieve the above objectives National Electric Policy has been designed. To fulfill the objectives

    of the NEP, a capacity addition of 78,577 MW has been proposed for the 11th plan.

    This capacity addition is expected to provide a growth of 9.5 % to the power sector.The Tenth Plan for fiscal years 2002 to 2007 targeted a capacity addition of 41,110 MW, which was

    subsequently revised to 30,641 MW; however at the end of the Tenth Plan period, only 21,180 MW

    of capacity was added. This shows that India is not upto the mark in achieving the targets of

    generation. Our planning is perfect but our path to achieve the target is not perfect.

    1.2.2. INVESTMENTS IN GENERATION

    The total fund requirement for generation projects, during the Eleventh Plan period is estimated at

    Rs. 4,108,960 million, with Rs. 2,020,670 million being required for the central sector, Rs.

    1,237,920 million being required for the state sector and Rs. 850,370 million being required for the

    private sector. The total fund requirement includes the fund requirement estimated at Rs. 1,891,950

    million for start-up generation projects benefiting in the Twelfth Plan.

    1.3. TRANSMISSIONTransmission of electricity is defined as bulk transfer of power over a long distance at high voltage,

    generally of 132 kV. In India bulk transmission has increased from 3708 ckm in 1950 to more than

    256,000 ckm today.

    The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This mission

    would require that our installed generation capacity should be at least 2, 00,000 MW by 2012 from

    the present level of 1, 14,000 MW. To be able to reach this power to the entire country an expansion

    of the regional transmission network and inter regional capacity to transmit power would be

    essential. The latter is required because resources are unevenly distributed in the country and power

    needs to be carried great distances to areas where load centres exist.

    Ability of the power system to safely withstand a contingency without generation rescheduling or

    load-shedding was the main criteria for planning the transmission system. However, due to various

    reasons such as spatial development of load in the network, noncommissioning of load centre

    generating units originally planned and deficit in reactive compensation, certain pockets in the

    power system could not safely operate even under normal conditions. This had necessitated backing

    down of generation and operating at a lower load generation balance in the past. Transmission

    planning has therefore moved away from the earlier generation evacuation system planning to

    integrated system planning.

    While the predominant technology for electricity transmission and distribution has been Alternating

    Current (AC) technology, High Voltage Direct Current (HVDC) technology has also been used for

    interconnection of all regional grids across the country and for bulk transmission of power over

    long distances. Certain provisions in the Electricity Act 2003 such as open access to thetransmission and distribution network, recognition of power trading as a distinct activity, the liberal

    definition of a captive generating plant and provision for supply in rural areas are expected to

    introduce and encourage competition in the electricity sector. It is expected that all the above

    measures on the generation, transmission and distribution front would result in formation of a

    robust electricity grid in the country.

    1.3.1. GROWTH OF TRANSMISSION

    Table.3: CUMLATIVE GROWTH IN TRANSMISSION SECTOR &

    PROGRAMME FOR 11th PLAN

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    1.3.2. TRANSMISSION NETWORK

    Table.4: Details of Existing Lines and Sub-Stations Region

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    have abundant natural resources. Demand for power continues to grow unabated. This calls for

    optimal utilization of generating resources for sustainable development. Thus, formation of

    National Power Grid is an effective tool to achieve this as various countries have adopted the model

    of interconnecting power grid not only at national level but also at international level.

    Further, acquiring Right of Way (ROW) for constructing transmission lines is getting increasingly

    difficult, especially in eco-sensitive areas like North-Eastern Region, Chicken neck area, hilly areas

    in Jammu & Kashmir and Himachal Pradesh. At the same time, these areas are also endowed withmajor hydro potential of the country. This necessitates creation of Transmission Super Highways,

    so that in future, constraints in ROW do not cause bottleneck in harnessing generating resources.

    Inter-connection of these highways from different part of the country would ultimately lead to

    formation of a high capacity National Power Grid.

    Thus, developments in power sector emphasize the need for accelerated implementation of National

    Power Grid on priority to enable scheduled/unscheduled exchange of power as well as for providing

    open access to encourage competition in power market. Formation of such a National Power Grid

    has been envisaged in a phased manner. Initially, considering wide variations in electrical

    parameters in the regional grids, primarily HVDC interconnections were established between the

    regions. This was completed in the year 2002, thereby achieving inter-regional power transfer

    capacity of 5000 MW.In the next phase, inter-regional connectivity is planned to be strengthened with hybrid system

    consisting of high capacity EHV/UHV AC and HVDC links. Such a National Power Grid is

    envisaged to disperse power not only from Mega sized generation projects but also to enable

    transfer of bulk power from one part of the country to another in different operational scenarios say,

    in varying climatic conditions across the country: Summer, Winter, Monsoon etc. Commissioning

    of links under this phase has already begun with the commissioning of 2000 MW Talcher-II HVDC

    Bipole, Raipur Rourkela 400kV D/C AC transmission line having Series Compensation,

    augmentation of Gazuwaka HVDC (500MW) back to back link and Tala transmission system. The

    inter-regional transfer capacity of 16,200 MW is available as on date. Further strengthening of

    National Power Grid is envisaged through high capacity AC EHV lines, 765 kV UHV AC lines/

    HVDC lines. This phase is planned to be implemented by 2012 when inter-regional power transfer

    capacity will be enhanced to about 37,700 MW by the end of XI Plan, depending upon planned

    growth of generation capacity.

    1.5. DISTRIBUTION

    The total installed generating capacity in the country is over 1, 35,000 MW and the total number of

    consumers is over 144 million. A vast network of sub transmission in distribution system has also

    come up for the utilization of power by the ultimate consumer.

    However, due to lack of adequate investment on T&D works, the T&D losses have been

    consistently on higher side, and reached to the level of 32.86% in the year 2000-01.The reduction of

    these losses was essential to bring economic viability to the State Utilities.

    As the T&D loss was not able to capture all the losses in the net work, concept of AggregateTechnical and Commercial (AT&C) loss was introduced. AT&C loss captures technical as well as

    commercial losses in the network and is a true indicator of total losses in the system.

    High technical losses in the system are primarily due to inadequate investments over the years for

    system improvement works, which has resulted in unplanned extensions of the distribution lines,

    overloading of the system elements like transformers and conductors, and lack of adequate reactive

    power support.

    The commercial losses are mainly due to low metering efficiency, theft & pilferages. This may be

    eliminated by improving metering efficiency, proper energy accounting & auditing and improved

    billing & collection efficiency. Fixing of accountability of the personnel feeder managers may help

    considerably in reduction of AT&C loss.

    With the initiative of the Government of India and of the States, the Accelerated PowerDevelopment & Reform Programme (APDRP) was launched in 2001, for the strengthening of Sub

    Transmission and Distribution network and reduction in AT&C losses.

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    The main objective of the programme was to bring Aggregate Technical & Commercial (AT&C)

    losses below 15% in five years in urban and in high-density areas. The programme, along with other

    initiatives of the Government of India and of the States, has led to reduction in the overall AT&C

    loss from 38.86% in 2001-02 to 34.54% in 2005-06. The commercial loss of the State Power

    Utilities reduced significantly during this period from Rs. 29331 Crore to Rs. 19546 Crore. The loss

    as %age of turnover was reduced from 33% in 2000-01 to 16.60% in 2005-06.

    The APDRP programme is being restructured by the Government of India, so that the desired levelof 15% AT&C loss could be achieved by the end of 11th plan. Since incentive financing is proposed

    to be integrated with the existing investment program to achieve commercial viability of SEBs /

    Utilities and link it to the reform process, the original APDP was rechristened to Accelerated Power

    Development & Reforms Programme

    (APDRP) during 2002-03 for 10th five year plan.

    The objectives of APDRP are:

    Improving financial viability of State Power UtilitiesReduction of AT & C lossesImproving customer satisfaction

    Increasing reliability &quality of power supply

    The scheme has two components as below:a. Investment component Government of India provides Additional Central Assistance for

    strengthening and up gradation of sub-transmission and distribution network. 25% of the project

    cost is provided as Additional central plan assistance in form of Grant to the state utilities. To begin

    with the Govt. also provided loan to the tune of 25% of the project cost. However in accordance

    with the recommendation of 12th finance commission, the loan component has been discontinued

    from FY 2005- 06. Now utilities have to arrange remaining 75% of the project cost from FIs like

    PFC/REC or their resources. Special category state (like NE states, J&K, H.P, Uttaranchal and

    Sikkim) are entitled for 90% assistance in form of grant and balance 10% fund.

    b. Incentive component - An incentive equivalent to 50% of the actual cash loss reduction by SEBs/

    Utilities, is provided as grant. The year 2000-01 is the base year for the calculation of loss

    reduction, in subsequent years. The cash losses are calculated net of subsidy and receivables. Funds

    Released:

    Table.5: The details of the cash loss reduction and incentives released to various states

    under APDRP (As on 31 March 2008)

    Schemes undertaken under APDRP are for renovation and modernization of sub-stations,

    transmission lines & distribution transformers, augmentation of feeders & transformers, feeder and

    consumer meters, high voltage distribution system (HVDS), consumer indexing, SCADA,computerized billing etc.

    1. Project Formulation

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    The State utilities to prepare for each of the high-density areas in order of priority, Detail Project

    Reports (DPRs), based on the Technical Manual prepared by the Expert Committee on Distribution,

    constituted by the Ministry of Power. These DPRs are to be vetted by NTPC or PGCIL and put up

    to MOP for sanction. The different project components shall include:

    2. Energy meters on Feeders

    Static meters on 11 kV out-going feeders and HT consumers have been contemplated. Though the

    Chief Ministers conference held in March 2001 decided to complete the implementation of thefeeder meters by December 2002, due to various reasons their procurement and installation is yet to

    be completed. Since these feeders provide the metering at the points of bulk deliveries in the

    distribution system, these are of paramount importance for carrying out energy audits. Actions for

    procurement & installation of these are being pursued vigorously. It is also necessary that the meters

    be provided with on-line communication facility so that reliable, continuous data from all the

    substations are made available without manual intervention.

    3. Energy meters on DTs & Consumers and energy accounting

    In many areas it has been planned to install suitable energy meters at distribution transformers to

    facilitate detailed accounting of energy flows and these have to be planned with suitable data

    transmission / collection facilities convenient to the utilities. Such meters can also help in keeping

    track of the distribution transformer loading and thereby reduce their outages apart from providinguseful information on consumption patterns for demand side management.

    4. 11 kV Feeder as Profit Centre

    Administrative measures are considered a powerful tool in our overall reform strategy because of

    the tremendous benefits it can provide in a short time span and with least burden to the SEB's.

    Recently, Andhra Pradesh has planned to entrust the distribution in selected 11 kV feeders and

    below levels to selected agencies with the requisite capabilities and have invited tenders for such

    tasks. Karnataka has come out with the program of Grama Vidyut Pradhinidhis for distribution in

    selected 11kv feeder areas. Success of such endeavors would go a long way in finding a solution to

    the issues of the Indian power sector.

    5. Technical Loss reduction measures

    Measures for technical loss reduction include Installation of capacitors at all levels;

    Re-conductoring of over loaded sectionsRe-configuration of feeder lines & distribution transformers so as to reduce the length of LT

    lines

    Make the system less LT oriented by installation of smaller size energy efficient distribution

    transformers so that each transformer supplies power to 10 to 15 households only

    Development of digital mapping of the entire assets of distribution systemComputerized load flow studies so that investments could be undertaken for long-term

    strengthening of the distribution system.

    6. Improving customer satisfaction

    Customer satisfaction can be improved through providing better quality power in terms of voltagefluctuations and reliability by reducing outages. These necessarily call for technical intervention in

    firstly ensuring that the assets already created are maintained in proper working condition and

    secondly through augmenting the system. Further, customer complaint redressal mechanisms are to

    be made more responsive and proactive through building transparent and reliable system with the

    help of computerization. The system should be capable enough to meet the growing demand of

    information conscious customers.

    7. Computerization

    Creation of comprehensive, up to date consumer index and system databases on computerized

    platforms are essential for creation of platforms for efficient commercial and technical operation

    and management of any distribution system. The APDRP program has laid emphasis on this basic

    need and actions are on in many areas for creation of such databases. The energy accounting, billingand revenue management platforms are also planned under the APDRP program for realizing the

    objectives outlined above and provide better services to the customers. Implementations for these

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    are under various stages in different areas. In addition provisions of computerized automatic data

    acquisition at the substations are planned. Based on the needs these would be hooked up to suitable

    Supervisory Control and Data Acquisition systems.

    8. Turnkey Implementation

    The schemes proposed under APDRP have to be implemented in a very short time frame so that

    benefits of the investments are perceived and confidence is generated in the FIs that investments in

    the distribution sector can be bankable. Execution of the scheme adopting conventionalarrangement of ordering each of the components separately would be time consuming and delay in

    arranging any one component could lead to overall time delays. With the present day manpower

    position in most of the SEBs it would also not be practical to coordinate the efforts of multiple

    agencies. By awarding the works under a turnkey contract the scheduling of equipment would be

    the responsibility of the contractor and shall keep in adhering to the time schedules. Hence turnkey

    packaging concept would be adopted for execution of works preferably through empanelled turnkey

    contractors to expedite project implementation schedule. Performance Guarantee Mechanism

    having adopted a turnkey concept for execution it would be possible to bind the contractor in terms

    of

    - Work completion schedule

    - Overall costs- Equipment performance.

    A scheme of incentives for early completion and penalties for delays or failure to meet performance

    guarantees can also be worked out in the turnkey contracts. If required performance guarantee

    contract mechanisms will be introduced whereby the turnkey companies would implement projects

    with guaranteed AT&C loss reduction with their own investments. The returns are expected from

    the guaranteed incremental loss reduction.

    Implementation of various activities / interventions will be prioritized to ensure quick

    improvements in reliability and quality of power supply, reduction in AT&C losses, increase in

    revenues and reduction in outages. The focus will be on 11 KV feeders, Distribution transformers

    and the Consumers.

    Therefore, the SEBs/State Utilities shall be urged to implement projects sanctioned under this

    programme on turnkey basis through pre-qualified turnkey contractors selected on a competitive

    basis to ensure quality and expeditious implementation.

    9. Technical Specification & Standardization

    The Expert Committee has also recommended standardization of technical specifications of

    equipment used in the distribution sector. Specifications are being drawn up for energy efficient and

    standardized equipments like electronic and static meters, transformers, capacitors, conductors,

    insulators etc., with the assistance of the Indian Electrical and Equipment Manufacturing

    Association, the Confederation of Indian Industry and the Bureau of Indian Standards etc.

    Appropriate Expert Committees have been set up for this purpose.

    NTPC and PGCIL have also prepared model bidding documents which are available for use by theutilities.

    10. Accreditation

    Project formulation for up gradation of distribution network is a highly specialized job that involves

    detailed energy balancing and network reconfiguration necessary for a high voltage or low voltage

    distribution system. The SEBs may or may not have adequate skills in the area and, therefore, may

    like to acquire the expertise and skills on an outsourcing basis. In order to cover a large number of

    urban & industrial areas in the country, within the next 4 to 5 years, it is essential to make available

    a number of accredited specialized agencies for the purposes of energy audit & accounting, project

    formulation, turnkey implementation, project monitoring and project evaluation. SEBs / Utilities, if

    they so desire, would be able to outsource the implementation to accredited agencies for quick

    formulation of quality projects and their implementation. A Committee with members from NTPC,PGCIL, PFC, CEA, SEBs /Utilities, credit rating agencies, FIs etc. will be constituted to accredit

    reputed agencies for the above purpose. This would require engagement of agencies that are

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    specialists in the fields of work given below in assisting the states which lack internal capabilities or

    manpower, and oversee the proposals & implementation by the states who are well equipped:

    Engineering Agencies: To formulate and appraise the DPRs for augmentation of subtransmission

    and distribution system and oversee implementation including quality checks.

    Project Monitoring Agencies: To review the physical and financial progress of the project and

    bring out concern areas to the notice of the MOP for immediate resolution to avoid time and cost

    over - runs.Turnkey Contractors: To undertake design, manufacture, supply, erection, testing &

    commissioning and provide maintenance facilities and performance warranty for the various

    components involved in the sub-transmission and distribution system.

    Project Evaluators: To conduct concurrent and post execution evaluation of the anticipated and

    actual benefits accrued consequent upon execution of the project.

    Energy Accounting & Audit Agencies: The key success of distribution sector lies in bridging the

    gap between the energy drawn from the system and the metered energy supplied to the customers.

    The MOU with the States has a provision for conducting energy audit on each feeder. But the

    results of the audit have shown that a fair amount of energy accounted for as supplied is based on

    assessment. For success of the program and improving revenue realization it is essential that all

    energy transactions are adequately metered and properly accounted. Just as any business wouldhave to get its accounts audited it is necessary that this energy accounting is audited by eminent

    third parties so that the programme can sustain on its own strength in the coming years. For

    carrying out the detailed activities at field level agencies with sufficient experience in the respective

    areas of work are proposed to be identified and accredited. Any SEB can invite quotations from the

    accredited parties for the specific work and immediately place an award thereby saving

    considerable time and effort. This would facilitate in reduction of bidding time, bring in uniformity

    of terms of reference and work content. For the other activities especially those involving HR

    initiatives at SEB level and DSM and distributed generation concepts, discussions are being held

    with international financing agencies to support the programme.

    11. Application of Information Technology

    Information technology and computer aided tools for revenue increase, outage reduction,

    monitoring and control, play a vital role in distribution management. It is, therefore, proposed to

    have a technology mission for customizing / development of cost effective and relevant solutions

    for consumer and control point data communications, remote monitoring, operation and control, etc.

    for the distribution network. Involvement of IT industries in this effort is envisaged. IT applications

    will be used in such processes in the distribution sector to ensure higher revenues as a result of

    segregation of T&D losses, and controlling commercial losses, especially for metering, meter

    reading, billing, collection and outage reduction.

    12. Management Information System (MIS)

    Operational efficiency improvement and customer servicing also need to be addressed at various

    levels in the organization. In this regard, an effective Management Information System (MIS) isrequired to ensure effective flow of information to facilitate quick decision- making at various

    levels of organization and to improve the operation and management of the distribution system.

    This is proposed to be achieved through computerization and networking. Management Information

    System for the SEBs/ Utilities should provide relevant information at each level of the organization

    in timely and accurate manner. The timeliness and accuracy of information improves decision-

    making. For MIS, information flow is required from lower level to higher levels with some

    information in real time and some in batch mode. For real time information flow, networking within

    the organization is needed. In addition to this, information management required for monitoring and

    decision-making will be different at various levels in hierarchy. MIS should be able to take care of

    different needs at various levels. Otherwise huge data generated from MIS will not be of any

    significant use. The structure of MIS should be SEB specific because of difference in theirorganizational structures and responsibilities at various levels across the organization.

    A generalized framework of MIS is presented which may be tailored to suit the needs of a specific

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    SEB/utilities.

    13. Capacity Building within SEBs/Utilities

    Even though SEBs have expertise in different fields, strengthening of sub-transmission &

    distribution network on a scientific basis using computer aided tools requires an integrated

    knowledge. Most SEBs, during the regional meetings held in April and then later in June, 2001

    expressed their inability to take up such work with their own manpower. It was considered

    necessary to promote capacity building exercise in the SEBs/State Power Utilities to enable SEBpersonnel to prepare detailed project reports for each of the districts/ circles and implement the

    project using APDRP funds at a later stage. Capacity building exercise is to cover:

    Training the manpowerEnergy audit & accounting studies

    Making the SEB officials collect relevant data from each 11 KV feeder in the identified circle.Analysis of the data using computer tools to prepare feeder wise computer aided least cost

    project report.

    Supervision of implementationSeveral training programmes were organized by the training institutions such as Power

    Management Institute (NTPC), National Power Training Institute, PGCIL etc., and several working

    level officers from the various SEBs benefited from such programmes. It is planned to furtherstrengthen our efforts in imparting quality training to bring about changes in business perspective

    crucial to the success of our power reform programme.

    It is proposed to provide extensive training to the staff of SEBs / Utilities at all levels to so as enable

    them to develop bankable project reports covering techno-commercial activities for each circle and

    manage electricity distribution with a commercial orientation. Capacity building is envisaged as a

    continuous exercise to ensure that the latest developments are internalized. Distribution reforms

    require a structural change in the existing set up of the SEBs. In order to enable them to manage

    distribution on a profit centre approach and to improve their performance on the basis of certain

    benchmarks, funds under APDRP will be provided only to those State Govts. /SEBs which agree to

    certain precedent conditions through an Agreement The SEBs / State Distribution Utilities will

    execute a SEB/Utilityspecific Memorandum of Agreement [MOA] with the Ministry of Power. The

    Ministry of Power will also monitor implementation of the precedent conditions before releasing

    funds. The efficiency gains on account of APDRP investments shall be intimated to the regulatory

    commission to ensure that the benefits and reliefs are passed on to the customer by the private

    utilities.