Improving power DISCOs’ performance

Inefficiencies of distribution companies have been considered as one of the main power sector problems, although this is not the sole issue and performance improvement alone may not allow to get rid of the problems and difficulties of the sector

Losses may at best be halved and brought to the level of 8-10%

Technical improvements such as smart meters alone may not be a panacea but organisational changes would be required as well

We will discuss some of these issues and strategies in this space

One of the DISCO performance metrics is T&D losses, which include technical and commercial losses

The latter includes theft and there is no dearth of it in the system

In Pakistan, aggregate T&D losses have amounted to 17%, a slight improvement over immediate years

Interestingly, the situation in India is more or less the same

There, these losses are 21%, which have come down from 33% in 2003

There should be no complacency, however, in India the financial condition of DISCOs is almost equally bad, requiring billions of dollars of bailouts by the central government

There is so-called circular debt too, which as per latest data was INR 1

39 trillion – our corresponding figure is PKR 2

3 trillion, roughly equal taking into account the exchange rate difference

It should be noted that the Indian economy and population is 8-10 times larger than that of Pakistan with installed generating capacity of 373,436 megawatts, of which 89,636MW is renewable and 45,699MW is hydro

Reasons are almost identical between the two countries – poverty and low paying capacity of consumers, theft and leakages, corruption and inefficiency

Average may, however, be a deceptive metric

It can hide good and bad performers

Pakistan’s average of 17% hides worst performers Pesco, Mepco and Hesco with T&D losses of 38

8%, 14

93% and 38

55% respectively and good performer Iesco at 8


Organisational issues One thing that appears to be common among high T&D loss entities is their size and geographical areas – Qesco, Pesco, Hesco and Mepco have geographical areas of 334,616 square km, 77,474 square km, 81,087 square km and 105,505 square km

By comparison, K-Electric’s jurisdiction is 500 square km, which has a peculiar urban domain

Qesco is a supplier to the largest province, which is sparsely populated

Large areas mean larger distances between control centres and field offices and facilities

Distance breeds remoteness, lack of control and oversight, and field officers’ fiefdoms

It is said that the farthest point from the head office should not be more than 100 km to enable senior managers to travel to field offices and facilities

Small and cogent DISCOs have been discussed over the years

Pesco’s division into two or three companies is on the cards

Hesco has been divided already into two parts

There is indeed a strong case for dividing large geographical domains of DISCOs into two or three parts

It may also be noted that with the implementation of Competitive Trading Bilateral Contract Market (CTBCM), electricity selling business is slated to be taken away from DISCOs and given to independent licensed companies as has been done in most advanced countries

Thus, one-third of the turnover may be privatised

If geographical division is implemented as well, the DISCOs size would be reduced to 20-30% of the existing parameters

The size reduction along with wire-only status may enable the DISCOs to improve their efficiency as money and market aspect may be taken away from them and they would be restricted to asset management

In the reduced size, the risk of managing DISCOs may come down and competition among takers may increase

Lesser companies may delve into buying and running DISCOs

In the current situation of large assets and turnover, only foreign companies and their joint ventures may venture, which may result in foreign exchange drain

Privatisation has been opposed by trade unions and they have managed to discourage it, although it is the government which did not have clear plans and strategy in this respect

This may continue to be the case

Companies can, however, be divided without going into privatisation

In fact, the prospects of privatisation may improve

Only accounting and billing has to be separated along with a few other manageable organisational adjustments

Smaller companies may require cheaper management and smaller boards as well

T&D losses and other pilferages may be controlled due to closer control and oversight

This is the step one that could have been taken by any hesitant government

High-loss DISCOs may be initially taken up for this task

Technical interventions Interesting developments have taken place for the reduction in T&D loss (theft, leakages, billing frauds, etc)

A Canadian company has developed a smart and mobile sensor, which can be installed (clipped with ease) on transmission or distribution wires and major electrical parameters can be measured

It has an inbuilt wireless communication module, which instantaneously transmits data to an analytical software platform

Anomalies in the energy flow can be diagnosed with the help of database

The sensor at $100 a piece is not a bad deal

It is not required to be fixed at one place but is mobile

Hence, a few teams per district can have sets of these sensors to keep monitoring possible anomalies and theft

Fifty sensor sets per district can enable formation of a viable anti-theft squad

For 100 districts, it would be 5,000 sensors

In $1

5 million, a whole country-wide project can be launched

However, there is a catch in it

It requires the support of a software platform, which can be costing more than the hardware and the consultant’s fee

The company offers a performance-based payment

It brings its own software and hardware and takes a share in the savings from loss reduction

Remarkable progress has been made in the area of data mining and analytics and forensic software

Billing analysis can reveal cases of fraud and collusion in meter reading, bills compilation and payments received

There can be internal or external issues

It would be advisable that our DISCOs (both electrical and gas) employ these software or employ specialised consulting services in this respect

Smart meters We would emphasise the redesign and revival of smart meter programme, which has the potential of reducing theft

The current programme is purposeless and not feasible

If implemented, throughout Pakistan, it would cost more than seven years and almost 10 years

A redesigned programme focused on distribution transformers would be cost effective and can be fast-tracked to two years

Priority should be given to high-loss DISCOs where the initial ground already exists through the earlier US-aided pilot projects

The writer is former member energy of the Planning Commission and has authored several books on energy sector   Published in The Express Tribune, January 03, 2022

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Date:04-Jan-2022 Reference:View Original Link