June 2012 | Suchita Vemuri
Simple steps of a complex dance
The extraordinary story of how Tata Power Delhi Distribution — by winning hearts and changing mindsets, and through technology and commercial savvy — transformed a loss-making government entity into an efficient and profitable operation that has become a benchmark for public-private partnerships
Tata Power Delhi Distribution (TPDDL) is one of India’s most remarkable success stories in public-private partnerships. A joint venture carved out of the government-owned loss-making power distribution company, Delhi Vidyut Board (DVB), TPDDL has come a long way in the decade of its existence. It is the first power distribution company in India to report profits and present dividend earnings to its joint owners, the state government of Delhi and Tata Power. And it is the first power distribution utility from India to win the prestigious Edison Award (twice) for outstanding contributions to the advancement of the industry worldwide. Most importantly, it represents a successful working model for future public-private initiatives.
TPDDL, earlier named North Delhi Power (NDPL), which services the north and northwest areas of Delhi, began operations in July 2002. In the years since, it has brought aggregate technical and commercial (AT&C) losses down from 53 percent to 12 percent, beating the world average of 15 percent. Power outages in the region it lights up are down from a regular five hours a day to near zero and revenues are up 60 percent. Just as significantly, the number of enterprises in the TPDDL distribution area has grown six times, thanks to reliable power supply.
The human element
The most easily recorded of TPDDL’s achievements are the technology and commercial milestones, but its biggest success has been in human terms. The transformation of TPDDL is a paean to its people — the DVB public sector employees who took on new roles, absorbed new processes and technologies and established high standards of quality and performance.
As Delhi Chief Minister Sheila Dikshit says, “[The employees] helped effect a turnaround, something which seemed impossible when [TPDDL] started off 10 years ago.”
The successful reform depended on an acceptance of change, as much by consumers as the employees of the erstwhile DVB. Indeed, as much as two-thirds of the current TPDDL staff (numbering about 4,000) are former DVB personnel. And the tale of this transition is one for the management textbooks.
Says Tata Power managing director Anil Sardana, who headed TPDDL when it was established, “We acquired close to 5,600 employees from DVB, among them a large segment of people who had not even finished middle school and had never received any training. Even the executives and supervisors had not been given in-house training, nor had they been exposed to industry best practices.”
Betting on people
The TPDDL leadership team strongly believed that everything was vested in the people of the organisation. Mr Sardana underlines the point when he says, “We had to depend on them totally, especially as nothing was documented.”
This point was also explained to the TPDDL board of directors by Mr Sardana, “If the existing staff members do not allow our governance, do not accept us, there is a possibility of the venture failing. So you have to give them the respect they deserve and not disturb them by bringing in people from outside. We have to work with these people.”
It was from such an approach that the successes to come stemmed.
|TPDDL in numbers|
||510 sq km|
|Length of network
|Number of customers
||1.2 million households (235,000 customers for every square kilometre)|
||4,833 units per customer per year|
It was not smooth sailing, though. A number of former DVB employees were chary about the new management. Some unions threatened strikes and other agitations, several leading members were aggressive at meetings. The general staff was critically watchful of the small group of Tata employees — about 25 young professionals — that descended on them, all from Mumbai and armed with powers to change systems that had been in place for decades.
The challenge was to fashion a single team dedicated to improving the utility’s services. As TPDDL chief executive officer and executive director Praveer Sinha describes it, “A critical challenge was to align the entire inherited workforce with the Tata work culture and motivate them to address the problem of AT&C losses, the power cuts and so on. The reforms had to be strategised with sensitivity and executed with agility.”
The crude and the sweeping
“Some changes had already begun to be instituted before the joint venture came into being,” says Ramesh Chander Kher, currently an advisor to TPDDL, and then the chief engineer at DVB, before he took over as general manager for commercial operations at the new company. At DVB, Mr Kher had pushed for the single-point delivery (SPD) system for connections in un-metered slum areas. “The SPD and similarly crude methods of cutting commercial losses helped bring down AT&C losses in the two years leading up to the institution of TPDDL. But there was apprehension about sweeping changes after the new company was set up.”
The new management team from the Tata group tried to meet the sullen anxiety it faced with sensitivity at every level, from the minor everyday environment to complex professional mores. Small steps smoothened the path to integration, from retaining the basic decor of the old DVB offices to setting up various platforms for discussion.
For the Delhi government officials, familiar with the problems that other public-private initiatives had run into, it was the sensitivity on display that was reassuring. Says Praveen K Tripathi, chief secretary, Government of Delhi, “I think the success of TPDDL lies in the professional approach the company adopted. [They were] able to win over customers and communicate their sincerity of purpose.”
Also reassuring to the former DVB staff was that TPDDL offered them the choice of staying with the government-denominated terms of employment or moving to the ‘cost-to-company’ employment terms offered by the new enterprise (about half of the managerial workforce took this option). Also on offer were various reward and recognition schemes and a time-bound promotion scheme. Those who wished to leave were given a generous voluntary retirement package. Some 1,800 former DVB employees opted for voluntary retirement but most of those who had held management positions stayed, “excited by the promise of effective change,” says Mr Kher.
Demanding norms for professional standards and behaviour at the workplace were instituted, including a bar on bad language, indiscipline and the like. “These seemed minor but it brought in a culture of professionalism,” says Anil Kumar Choudhury, vice-president for human resource management and administration. “This is a people-based organisation. If the staff is not happy, the organisation cannot function effectively.”
The former DVB employees were waiting to see what the changeover would mean, in terms of job security, work conditions and career growth. The majority would soon be delighted. “Without the participation and cooperation of all employees, the company could not have brought the AT&C losses down to the current 12 percent,” explains Mr Choudhury, “especially as most of the 53 percent loss level at the time NDPL was started was due to commercial rather then technical reasons.”
At a more professional level, the new dispensation got creative to build a single entity out of the two separate organisms (DVB and Tata Power), and to cement professional and personal relationships at every level. A key measure was the constitution of several forums where operational and other issues were discussed openly. The ‘direct connect’ initiatives included appointing officers from the human resources department for each of the company’s six circles. The forums discussed a wide range of issues, from problems of water and toilets at the workplace to issues of safety and — crucially — the ways and means to curtail power theft.
Training sessions were started for all employees. “We began with induction sessions on the Tata code of conduct,” says Piyush Goyal, who was with the project from its inception and is currently head for customer relations management. “Such training continues in various technical and other fields, with a special emphasis on safety measures.”
For many, the new culture of efficiency, promising satisfaction and pride in their work, was reward enough. “I was on the verge of resigning, frustrated with my job as project engineer at DVB, when I read about the discussions on the new structure,” says Praveen Verma of the outage management system centre. “Pushed by friends and colleagues, I stayed on to see what this may mean in terms of job satisfaction and career prospects. I’ve never stopped being glad that I did.”
What made the difference
There are many factors that have played a role in Tata Power Delhi Distribution’s success. Principal among these were:
- Chief Minister Sheila Dikshit’s personal interventions against power theft.
- Effective change management, which included reassuring measures of continuity in terms of employment for former Delhi Vidyut Board employees.
- Anil Sardana, the then chief executive’s open-door policy for employees.
- Theft-proofing through tamper-resistant meters and high-voltage transmission lines.
- Setting up a backup power generation plant to supply key facilities such as hospitals and public lighting.
- Establishing the Centre for Power Efficiency in Distribution, a training centre established in 2005, which has helped create a skilled workforce for TPDDL and other power distribution companies.
- Introducing power-saving initiatives such as LED fixtures for streetlights. The Delhi government subsequently asked other power distribution companies to emulate this pioneering initiative.
The former DVB employees found the new management approachable and proactive in dealing with genuine problems. They, in turn, responded positively. Mr Sardana, then the chief executive, mingled with all employees on a regular basis. “This really helped me understand the problems people faced,” he says.
“I was with the project from minus-nine months,” laughs Mr Goyal. “But it was the first three years that were crucial to winning hearts; then it was mostly about managing the changeover. After that it’s been mainly about technology.” Indeed, it was those first three years that tested everyone’s commitment to the reforms.
Many of the erstwhile DVB staff still recall their frustration with the politically motivated obstacles they faced in the earlier dispensation. Yet the truth — and one that every member of the management team at TPDDL asserts — is that the vital factor in the organisation’s success over the past decade has been the political support that the Sheila Dikshit government gave to the reforms introduced by the new company.
|All-round stakeholder satisfaction|
Praveen K Tripathi, chief secretary of the Delhi government, says, “I think the success of TPDDL lies in the professional approach the company adopted; it was able to win over customers and communicate its sincerity of purpose.”
Anoop Kumar Gupta, a general manager at the Delhi Metro, which consumes about 600 million units of power per day (of which the major portion is from TPDDL), vouches for the reliability of the utility. “I would rate TPDDL the highest among power distribution companies in the national capital region in terms of promptness and quality of response when there’s a problem,” he says.
Says Praveen Verma, who is with the outage management system centre, “I was on the verge of resigning, frustrated with my job as project engineer, when I read about the discussions on the new [company]. Pushed by friends and colleagues, I stayed on to see what this may mean in terms of job satisfaction and career prospects. I’ve never stopped being glad that I did.”
Anil Sardana, former chief executive, TPDDL, and current managing director, Tata Power, says, “When we started, there was some resistance from the elected representatives. So I would personally attend meetings where discussions and decisions took place, so that I could present the company’s viewpoint and respond to queries. At first, people were aggressive but they changed when they realised that I stood by the Tata group’s value systems. What motivated me was the challenge of bringing about change; the country needed it and we needed to show people that it was possible.”
Credit for government
“The main credit goes to the government, which supported us solidly in the face of all kinds of opposition,” says Mr Goyal. “But, equally, all stakeholders can take credit for the success of this model: the regulatory authorities, the employees, the Tata management leadership team, the financial management consultants and, of course, civil society and our consumers. The idea was that it should be a balanced model that would be a win-win for all.”
Ms Dikshit herself played a key role in ensuring that customers accepted TPDDL’s new drive for proper metering and billing. Not only did she intervene personally, through meetings with consumers and others, she refused to entertain complaints from powerful vested interests who objected to the universal metering of electricity supply. She went further, shielding the staff from some of the complaints by asking for these to be forwarded to her office.
The Delhi government extended some financial support to the new enterprise — as it did to other power distribution companies (discoms) in the national capital region — during the transition period. The government decided to bear, for a period of five years, half of the Rs15-billion hit TPDDL was expected to suffer per annum (this figure was based on the 53 percent AT&C losses). It also agreed to take over the company’s existing liabilities and, finally, it allowed the new public-private partnership discoms to buy power from the national grid at Rs1.52 per unit instead of the prevailing rate of Rs2.25 per unit.
This discounted rate was calculated on the basis of the AT&C losses, the cost of power and the controlled (below-cost) tariffs set by the regulator. TPDDL undertook to start paying regular unit rates for power, as determined by the regulator, within five years. However, as a result of greater efficiencies, it was able to start paying the regular rates well before the cutoff date.
The 53 percent AT&C losses, the technical losses arising from poor network maintenance, and the commercial losses from theft and poor metering practices meant that half of TPDDL’s output brought in no revenue. “For every two units of power purchased and supplied by us, the cost of less than one unit was billed and collected,” says chief technical officer Arup Ghosh.
On July 1, 2002, when TPDDL officially came into being, this was the situation, as Mr Ghosh describes it, “The Delhi north and northwest power distribution network reported an average of five hours of outages every day. Voltage fluctuations were rampant, less than half the street lights were functional, about 20,000 applications for new connections were pending, and 100,000 consumer complaints awaited resolution.”
Today the constituency that TPDDL serves is assured of 24-hour power supply and voltage fluctuations are extremely rare. This performance has happened despite a 23 percent increase in the amount of power drawn from the grid (7,500 million units today against 5,200 million units in 2002). Transformer breakdowns are less than 1 percent and the functionality of the 125,000 streetlight points is 99 percent at all times.
|Power play in solar
TPDDL set up a 1MW solar power plant in December 2010. Comprising 5,500 solar photovoltaic panels, the plant was installed by Tata BP Solar. The crystalline silicone panels convert sunlight into power that is fed into the TPDDL grid line. Though the actual power generated by the plant is miniscule in relation to Delhi’s total peak demand, the plant indicates an important shift in the state’s approach to power. It is also a first step in the power distribution company’s proposal — submitted to the Delhi government — to install housetop solar panels (the panels are designed to last for about 25 years).
The impact is clear
The impact of the transformation can be seen in the region’s economy: the number of small workshops and manufacturing units in the Narela and Bawana industrial areas has grown from around 3,000 in 2002 to 18,000, much of the growth attributable to reliable power supply.
Mahipal Singh Bhanot, general manager for operations at the 300-bed Max Healthcare super specialty hospital at Shalimar Bagh, says that the facility, which consumes more than 12,000 units of power a day, has experienced fewer than 132 hours of outages in the last six months (a figure that includes the 15-minute mandatory daily shutdown the hospital undertakes to test its alternate power supply systems).
Quality of power — involving consistency in frequency and the absence of outages — influences the health and maintenance of power-consuming appliances, as important to householders with these goods as the uninterrupted supply of power is to priority users such as hospitals and urban-transport entities.
“The electricity business hasn’t changed much since the days of Edison and Faraday,” says Mr Ghosh. “There are new and more efficient ways to generate and transport electricity, but the most significant development is in the manner that equipment is used and controlled, much of it with the use of information and computer technology [ICT].”
In this context, one of the biggest factors in reducing AT&C losses at TPDDL was the introduction of path-breaking technologies. In 2002, when TPDDL was set up, it inherited two computers from the erstwhile DVB. “That was the extent of ICT support at the organisation at the time,” says Mr Goyal. He adds, “There was really no money to invest in ICT at the time. It was more important to improve the transformers, the lines, switches and so on.”
By 2004, a plan for using ICT in improving the network’s workings had been finalised; the plan was rolled out the following year.
|The SCADA centre
TPDDL's Supervisory Control and Data Acquisition (SCADA) system acquires, collates and records data, and monitors a transmission system of 56 grid stations. Through this system the network is controlled from a hi-tech, futuristic centre with a range of monitors. It has three-panelled computers with windows within windows, and computers with wall-sized monitors that have differently divided screens, offering up a mind-boggling range of data that allows the monitoring of localities down to every electric pole.
The SCADA system has a main server and 'hot standby servers' at the main control centre, as well as a backup control centre at another location.
Apart from generic functions like managing frequency trends and setting off alarms, the SCADA system has additional applications such as load-forecasting and load-shedding.
The outage management system and the distribution management system are components of SCADA, sending data to the network and keeping operations under watch and control.
Absence of benchmarks
The new company and its team of enthusiastic managers faced a serious handicap — the absence of benchmarks in India. So TPDDL looked abroad. “We began to study model initiatives from across the world and chose three companies as benchmarks: China Light & Power, Baltimore Gas & Electricity and the Mauritius Central Electricity Board,” says Mr Ghosh. The Dutch energy consultancy firm KEMA helped draw up a 10-year roadmap for technology improvements, which focused equally on non-ICT network measures.
Insulated aerial bunched cables were installed, which improved safety and reduced losses. Switching devices such as ring main units (RMUs) enhanced reliability and also flexibility in operational maintenance works. Tamper-resistant electronic meters were installed, curbing theft, and high-voltage distribution lines replaced the low-voltage lines of old.
Improvements included the laying of about 8,000km of new lines and cables, the construction of 56 grid stations and 180,000 new poles, and the installation of 2,000 RMUs. Among the ICT-based upgrades were enterprise resource planning (ERP) applications, a distribution management system (DMS), an operations management system (OMS) and software that enabled automated meter reading. The ERP applications were synchronised with geographical information systems (GIS) so that all installations could be identified.
TPDDL also constructed the Rithala captive power generation plant — as part of its islanding system — to serve as backup in case of a breakdown. This was primarily to provide for facilities such as hospitals and streetlights and it is a unique initiative for a power distribution company to take up.
TPDDL’s success is reflected in different facets of the electricity distribution business
TPDDL meets 27% of New Delhi's energy requirements — and has less than 2% of breakdowns
Help from technology
Technology has enabled TPDDL to improve its operations and services. “It has helped us curb both commercial and technical ‘leakages’ and also improve on safety,” says Ajai Nirula, chief operating officer and the person in charge of day-to-day operations.
Aiding TPDDL and others of its kind has been the Centre for Power Efficiency in Distribution. Established in 2005, the training centre, the first of this nature in India, is helping create a skilled workforce for the industry. “Everyone is trained in handling a range of equipment, so that they can work on old equipment as well as the modern, state-of-the-art equipment,” says Mr Nirula.
While technology has helped improve safety, TPDDL has also done its bit to improve awareness of safe practices. Field workers are empowered to take drastic measures if there are safety violations. “If they find a building or factory violating safety in anything related to electricity, they are authorised to unplug the connection,” says Mr Nirula. “Even in their own work, if there is obvious danger they are authorised to stop it.”
Technology has also helped institute preventive measures such as ‘thermoscanning’. “This helps identify potential weak spots in equipment and we can take steps to prevent a breakdown,” explains Mr Nirula.
Asset development, virtually nonexistent in the DVB regime, is now a focus area for TPDDL. The synchronisation of the fixed-asset registers under OMS and DMS with the GIS records means that assets cannot be lost easily as records need to be updated at several places.
Technology interventions have, additionally, eased TPDDL’s cost of distribution. Where the cost of distribution was 122 paise per unit in 2003, it is up just 2 paise per unit today, despite double-digit inflation, hikes in salaries and other operational expenses. Technology has also improved revenue collection. “Automated meter readings alone have enhanced collections by about 60 percent,” says Mr Ghosh, the chief technical officer.
High on low payments
It was the people factor that brought success to the technology interventions, too. “The people in the middle of the pyramid are happy to pay for rightly metered electricity,” says Mr Ghosh. Special attention, however, was needed for those at other points of the pyramid.
At TPDDL about 5 percent of the largest users account for around 60 percent of the discom’s revenues. Many of these users are industrialists, well-heeled and well-connected. Their reach with political influencers is well-known, a situation which had left DVB with huge losses. It was here that the Delhi government played a supportive role, refusing to entertain complaints from these users and insisting on metered consumption of electricity.
The government also chipped in to improve electricity connectivity for those living in slums. When TPDDL requested that each household be given a separate meter even where there was no title deed to the holding, the government agreed in the interests of improving efficiency in energy usage and distribution. With the assistance of nonprofits, TPDDL then approached the slum communities directly, explaining how bypassing middlemen who ‘fixed’ connections would reduce their electricity costs and improve each household’s energy security. The success of this approach is clear — collections in these areas are today 95 percent, against 30 percent in 2002.
The war against power theft was accompanied by campaigns to reach out to all categories of consumers. “Knowing that the government was behind us, the police extended strong support in tackling cases of power theft,” says Mr Nirula. “Alongside, we introduced technology measures to discourage theft, chief among which was installing high-voltage cables wherever possible, especially in problem areas.”
On its part, TPDDL stepped up its customer interfacing processes. Several measures to allow customers to have easier access to TPDDL officials were introduced, and special client service executives were appointed for high-volume customers such as hospitals, the Delhi Metro, the water supply board and others.
TPDDL has also benefited from the Tata Business Excellence Model (TBEM), a quality framework that helps companies strive for and achieve business improvement. As former managing director Sunil Wadhwa once explained, “The various elements of TBEM form the core of our way of working and have enabled us to transform an ailing utility into a profit-making, consumer-centric organisation that has the distinction of being recognised as the first success story in power reforms [in India].”
Its success notwithstanding, TPDDL continues to chase milestones. “The challenge in Delhi is to maintain the AT&C loss level at 12 percent and then improve further on this,” says Mr Ghosh. “The more exciting challenge, however, is to convince other utilities to replicate this model, even make it better.”
Looking further afield
The TPDDL of today is looking to take its learnings and expertise into fresh areas through the establishment of a wholly-owned subsidiary named NDPL Infra, a venture that targets business opportunities outside the licensed area of the company’s power distribution activities. “We want to leverage our core competency of technology adaptation and loss reduction to provide consultancy to electricity boards, both national and international,” says Mr Sinha.
This may be tougher than it appears. As Mr Sardana puts it, “Unlike Ms Dikshit, not many political leaders have the commitment to reform power distribution. Most politicians want to take the franchisee route, contracting private organisations just to read meters and collect bills. This is a limited approach.”
What is needed, as TPDDL has proved, is change management, driven by commitment from all stakeholders. That is the best takeaway from the story of TPDDL’s transformation.