The Water and Sanitation Program January 2007 71920 is an international partnership for improving water and sanitation sector policies, practices, and capacities to serve poor people Case Study New Delhi Power Limited Partnering for Power A public-private partnership initiative to rationalize the distribution of power in Delhi has proved to be a success. From a situation where losses were humongous and power thefts were a norm, the privatization of power distribution has helped turn the situation around, especially in the city’s slum and informal settlements. Approximately 11,000 slum cluster customers have been connected so far; 70 to 80 percent of these customers pay bills. The New Delhi Power Limited (NDPL), a joint venture between Tata Power and the Delhi Government to distribute power in the northern areas of Delhi, has already reached its five-year goal of reducing its losses from 51 percent to 31 percent in three years. Customers already connected can, apart from the possibility of sending e-mails and letters, make complaints and receive other services through a 24-hour call center, a commercial call center, and a consumer care center. 2 New Delhi Power Limited: Partnering for Power The Challenge Till 2002, in the pre-New Delhi Power Limited (NDPL) scenario, the power distribution and management in Delhi was in a shambles, having to cope with a burgeoning population of 14 million plus, a sixth part of which lived in slums and informal settlements. At the time when the NDPL took over the management, losses from electricity distribution had touched nearly 51 percent. This was apparently due to illegal connections in the network. Slum areas were being provided with electricity through a Single Point Delivery (SPD) contractor model. In the pre-NDPL scenario, many customers were not satisfied with the service and connect legally to the network, metered. The responsibility of reading claimed they were not billed properly. and partly by other means, such as the individual meters, billing the Therefore, the company developed the technical upgrading. customers and collecting the money franchising model and implemented it is with an SPD contractor, who The company adopted a three-step in new areas. It is now also trying to makes payments to the NDPL as strategy to reach its objective. In the transfer areas with SPD contractors per agreement. first year, it created confidence among to this new model. the consumers by ensuring technical Franchising Model. The responsibility improvements in the network. The Project Design second year saw work initiated in areas for billing is with NDPL. A contractor is responsible for reading the meters The NDPL—a joint venture between where many illegal connections existed and distributing the bills. The customer Tata Power and the Government of the and a need had been identified for can make the payment at NDPL’s National Capital Territory (NCT) of connecting to the electricity network. consumer collection center. There the Delhi—was formed as a result of the In the third year, the NDPL focused customer can also make complaints privatization of electricity distribution in on consumer satisfaction in the areas and collect information. The three types Delhi. It was designated to distribute where the strategy had already of contracts within the franchising power in the northern areas of Delhi. been implemented. model are with operation and Tata Power Company Limited acquired maintenance; without operation and Institutional Arrangements 51 percent stake in the NDPL and took maintenance; and jhuggi jhopdi (or JJ) control of the management effective The NDPL applies two models clusters (illegal squatters on public land) July 1, 2002. for connecting slum areas to the that are not metered. electricity network: The NDPL set for itself a target of The NDPL has preferred to have NGOs reducing its energy losses from 51 SPD Contractor Model. The NDPL as contractors in slum areas. percent to 31 percent within five years. provides a distribution transformer Mobilization and This was to be achieved partly by from which a number of customers Communication building up the customers’ trust and are connected. A meter is placed convincing them that good, reliable, and at the distribution transformer The NDPL organizes campaigns in affordable electricity is available if they but each household is also individually identified areas, informing households of 3 Project Costs and Finance The NDPL estimates a Rs. 5,700 million (US$127 million)1 capital investment in the first three years. Nearly Rs. 3,360 million (US$75 million) has been spent in the last two years towards improving system reliability and reducing losses. Connection Fees Normal customers: • Deposit: Rs. 600 (US$13). • Development charge: Rs. 4,000 (US$90). • Service charge: Rs. 2,000 (US$45). Slums (not JJ clusters): • Deposit (refundable): Rs. 600 (US$13). • Connection charge: Rs. 2,000 (US$45). JJ cluster customers: • Deposit: Rs. 600 (US$13). • Connection charge: Rs. 1,250 various possibilities and encouraging well as describing the simplicity of (US$28). Can be paid in installments them to get legal connections. The payments and other practical issues. of Rs. 25 (US$0.56). company also advertises in newspapers, especially emphasizing the legal issue as Customers already connected can, • No metering. apart from the possibility of sending Highlights e-mails and letters, make complaints Progress So Far and receive other services through the following options: Approximately 11,000 JJ cluster • No proof of ownership for land customers had been connected till property is asked for. • A 24-hour call center. As soon as September 2005. Of these, 70 to 80 • The contractor will also watch out a complaint is received, an SMS is percent customers pay bills. The NDPL for illegal actors. sent to a person in the field at has already reached its five-year goal the specific location. • No bidding process is necessary. of reducing its losses from 51 percent • Limited political interference helps • A commercial call center open to 31 percent. in speeding up the actions. from 9 a.m. to 9 p.m. 1 US$1 = Rs. 44.54 (as of December 15, 2006). Conversion rates from • A consumer care center. www.xe.com. All conversions from Rs. to US$ are approximate. References • Meeting with New Delhi Power Limited. 2005. www.ndplonline.co • Tata Power Company Limited. www.tatapower.com