Mr. Ramesh Narayanan Chief Executive Officer BSES Yamuna Power Ltd. at RPR 2012, 23-26 August, Goa, India

1. Aug’ 2012, Goa
The 13th Regulators & Policymakers Retreat
Experiences in Distribution Privatization
Ramesh Narayanan
Chief Executive Officer
BSES Yamuna Power Ltd.

2. Presentation Flow
 Demand Supply Mismatch
 Generation
 Reforms
 12th Five Year plan
 Distribution Reforms
 A Glimpse
 Challenges
 Finance
 Technology
 Manpower
 Strategy
 Innovation
 For Distribution Turnaround
2 BSES Yamuna Power Ltd.

3. DEMAND SUPPLY MISMATCH
3 BSES Yamuna Power Ltd.

4. PROBLEM : Power Demand Constraints
 Installed Capacity : 2,06,456 MW
 Grid Demand : 1,25,000 MW
 Suppressed Demand in the form of
 Huge piling of the New connection pendency (other than private utilities)
 More than 30% of the 2 Crs pumpset run on DG Sets
 Majority of the un-electrified railway corridors (other than main trunk lines)
 Unavailability of efficient Public transport system : Metro, Monorail etc.
HUGE Suppressed & Unaddressed Demand
4 BSES Yamuna Power Ltd.

5. India Vs China [ Yr 1991 to Yr 2012]
CHINA INDIA
YEAR 1991
 Installed Capacity : 1,50,000 MW  Installed Capacity : 66,000 MW
 Grid Demand : 1,25,000 MW  Grid Demand : 57,000 MW
Demand Growth
: 5 TIMES Demand
DOUBLED
YEAR 2012
 Installed Capacity : 950,000 MW  Installed Capacity : 2,06,456 MW
 Grid Demand : 7,40,000 MW  Grid Demand : 1,25,000 MW
Economic
Development
* Data Source : www.wikipedia.org & other reports
5 BSES Yamuna Power Ltd.

6. GENERATION REFORMS
6 BSES Yamuna Power Ltd.

7. GENERATION : accelerated growth
Sou rce : CEA
Installed capacity as on Jul’12 : 2,06,456 MW
 YEAR 1991-92: Liberalization Policy by Govt. of India
 New Policy Framework to foster Accelerated Growth in Power.
 Private / FDI participation for the Generation Sector
7 BSES Yamuna Power Ltd.

8. GENERATION Reforms : Enablers
ADMINISTRATIVE FRAMEWORK
 Statutory clearances sized up & streamlined.
 Investment Promotion Cell in MoP.
 Time bound clearances
LEGAL FRAMEWORK
 Standardization of Indian Arbitration & Conciliation 1991: Installed Capacity: 66,00 MW
Act, 1996 in line with UNCITRAL, 1976
 Ease in Foreign Direct Investments
FINANCE FRAMEWORK
 Concept of SPV / JV / Project based Financing
 Assured Return on Equity
 Cost reflective Two Part Tariff
 Incentives - tax holiday, duties & taxes waivers
2012: Installed capacity: 2,06,456 MW
OBJECTIVE : Impetus to the Power GENERATION
8 BSES Yamuna Power Ltd.

9. GENERATION : Global Ranking
205
India to Rank No 3 by 2017
9 BSES Yamuna Power Ltd.

10. Over Rs
11,00,000 Crs
12TH FIVE YEAR PLAN [ 2012-2017 ]
~88,000 MW
addition Sector 8th plan 9th Plan 10th Plan 11th Plan 12th Plan
Generation Central 50% 24% 57% 34% 28%
State 42% 50% 30% 34% 15%
Private 8% 26% 13% 32% 57%
TOTAL 100% 100% 100% 100% 100%
Over 4,50,000 Crs of Investment
Transmission
 1,36,000 CKm of Transmission Lines
 2,95,000 MVA of Transformation Capacity
Over 2,50,000 Crs of Investment
Distribution  Cater to additional demand for : 88,000 MW
 2.1 times the generation capacity ; Cost: 2.3 Crs / MW
Over 4,30,000 Crs of Investment
10 BSES Yamuna Power Ltd.

11. DISTRIBUTION : A GLIMPSE
11 BSES Yamuna Power Ltd.

12. DISTRIBUTION Sector : Status
Distribution Reform Area Segregation
*Including Delhi
Major Private Player engaged as Distribution Licensee
Kolkata, Mumbai, Delhi, Ahmedabad, Surat, Greater Noida, Orissa (3/4th of the state)
Major Private Player engaged as Distribution Franchisee
Agra, Bhiwandi, Kanpur, Nagpur, Aurangabad, Gwalior, Sagar etc.
Private Sector Participation a meager 4%
12 BSES Yamuna Power Ltd.

13. Distribution Losses @ All India Level [FY09]
National
Average
The average AT&C losses (%) National Level for FY 09 : 28.44% (Source : PFC report)
13 BSES Yamuna Power Ltd.

14. Distribution Challenges
Finance Technology Man Power
Strategy Innovation
14 BSES Yamuna Power Ltd.

15. Finance
Rs. 2.3 Cr is needed to create 1MW
Distribution infrastructure
For 1,08,000 MW ( 12th Plan Demand + Existing Gap of 10%),
sector requires Rs. 5,20,000 Crores
Debt: Rs. 3,65,000 Crs. (70%) ; Equity: Rs.
1,55,000 Crs. (30%)
15 BSES Yamuna Power Ltd.

16. Finance
Regulated • Fixed RoE (14%)
Business • Margin pressure
Difficult to • Poor balance sheet
raise funds • Unpredictable revenue
• Increased private participation
Requirement
• Allowing reasonable profits
16 BSES Yamuna Power Ltd.

17. Finance
Dedicated Common Distribution Infrastructure
Fund to be floated by government
Funds to be made available at attractive rates
to Discoms
Easy access to funds like JNURM, R-APDRP,
RGGVY etc
17 BSES Yamuna Power Ltd.

18. Technology
Proposed
• 220/66 KV
• Land
• 66/11 KV • 220/33 KV • CAPEX
• Manpower
• 11/0.4 KV • 33/0.4 KV • O&M
Existing Advantages
18 BSES Yamuna Power Ltd.

19. Man Power
Requirement Skill
Requirement for 12th plan Requirement
• 5 person /MW • For 88,000 • 70% skilled
for urban areas MW ( Taking 7
persons per MW)
• 4,30,000
• 10-15 persons skilled
per MW for • 6,16,000 persons
rural areas persons
needed
19 BSES Yamuna Power Ltd.

20. Man Power
Training &
Skill Set
Development
Knowledge
Distribution Specific
Attitude
Special courses at ITIs, Values/Culture
NPTI, IITs and IIMs
People interaction
20 BSES Yamuna Power Ltd.

21. Strategy
Raising the per capita Open & flexible
consumption of power Energy Markets
Reduction of AT&C losses Improving supply
& Cost of supply Quality & Reliability
21 BSES Yamuna Power Ltd.

22. Innovation
Research and Development
Dedicated centers Separate Fund Arrangement
Advanced Research
Remote metering Automation (SCADA etc.)
People less customer care Safety
Money less transaction O&M practices
22 BSES Yamuna Power Ltd.

23. AN APPROACH
23 BSES Yamuna Power Ltd.

24. Comparison : Gen-Trans-Dist
Parameter Generation Transmission Distribution
Cost reflective Tariffs
with timely revisions
Tax Holidays ;
Excise / Import Duties waivers
Based on Based on Based on
Project Financing
PPAs BPAs Balance Sheets
Transparency of cost/expenditure
in tariff petition
Reduce Disparity Across the Power Chain
24 BSES Yamuna Power Ltd.

25. Supporting Framework
ADMINISTRATIVE FRAMEWORK
 All statutory support to the discoms for schemes like RAPDRP etc
 State government assistance for facilitating discoms network infrastructure
REGULATORY FRAMEWORK LEGAL FRAMEWORK
 Realistic approach towards Discom  Endorsement of the Electricity Act -2003
 Time bound discom cost amortization  Theft / misuse of electricity
 Cost reflective tariffs & support schemes  Mitigation of regulatory challenges
 Discom standards of performance
FINANCE FRAMEWORK
 Concept of SPV / JV/ Project based Financing
 Assured Return on Equity
 Low cost debt instruments for overall sectoral growth
 Incentives in terms of tax holiday, duties & taxes
OBJECTIVE : Provide much needed Impetus to the Power DISTRIBUTION
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BSES Yamuna Power Ltd.

26. Approach towards Accelerated Distribution Reforms
Lender-Discom Partnership (LDP) Model
Best Performing REC / PFC / other
Utilities (BPU) financial institutions SPV
 Indulge itself with HIGH OUTSTANDING DISCOMS
 Discoms to FRANCHISE certain cities to SPV for loss reduction & reforms.
 The EXISTING DEBT to be converted to EQUITY portion for that franchise
 BPUs to bring in technical & business efficiencies for the franchisee
26 BSES Yamuna Power Ltd.

27. Approach towards Accelerated Distribution Reforms
WIRE – CONTENT MODEL
WIRE Business (EPC)
 Centralized Monitoring (Inline with generation addition)
 Centralized empanelment for EPC contractor (for discom network creation)
 New n/w created to be leased to the state discom by the Central agency.
 State Discom to pay Fixed Cost / Lease rental to the centralized agency
CONTENT Business (State Discom)
 Power procurement / management
 Operations & Maintenance of the WIRE business
Much needed impetus to the Network Creation
27 BSES Yamuna Power Ltd.

28. Thank You
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