Urban power reforms: Slow tenders, unequipped contractors hinder IPDS

In the concluding part of Power Reforms series, Business Standard throws light on the real issues delaying its physical progress and overall development of economy of India's 3,630 small towns

In a strongly worded letter to all state-owned power distribution companies (discoms) last month, the executive director at Power Finance Corporation, the nodal agency for implementation of Integrated Power Development Scheme (IPDS), pointed out the slow pace of work being done under urban power reforms scheme and urged to expedite it.
 
“It is observed that the present pace of physical progress does not seem to be in commensuration with the time frame of completion of projects, given that the last of the projects should be completed by March 2019,” said the letter published on the IPDS website.
 
The focus of IPDS is to revamp urban power supply systems through underground cabling, transformer capacity improvement, making conductor lines theft-proof, and metering each and every distribution transformer (DT) and household.
 
However, limited capacity of the market (contractors) to cater to a large number of projects, delays and increased costs due to municipal approvals and charges, tepid bids in some states, and regional issues have ebbed the physical progress of the IPDS, said officials.
 
“Some states lost time in the award process, thus the delay. In addition, it so happened that there were more projects undertaken than the capacity of the market,” said a senior power ministry official. He further said the projects other than smart metering, the number of bids received from turnkey contractors was relatively less, while in some cases in some states, there were no bidders, he said.
 
The IPDS intends to revamp the entire power supply ecosystem in 3,630 towns and cities through 505 projects undertaken by 54 discoms in 32 states in India.
 
To design and implement the IPDS projects, discoms have to deal with municipal bodies or town authorities to get clearances, make provisions for land, underground channels, etc. Officials from discoms that Business Standard spoke with said that this coming to terms of municipalities and discoms has been a big hurdle in implementation, especially for underground cabling works, a major subset of system strengthening part of the IPDS.

 
For instance, the most expensive and time-consuming work needed for underground cabling is road cutting.
 
“In Thane Municipal Corporation near Mumbai, the local body charged us Rs 9,000 per metre for road cutting, while it costs Rs 2,500 per metre on average. This added not just to delays but also increased the financial burden,” a chief engineer from Maharashtra state discom told Business Standard.
 

Cases like these went up to the chief minister of the state for resolution, said the official. “To make matters worse,” he added, “central funds cannot be used for road cutting purposes and the discom has to spend.”
 
Consider the progress on DT metering. While some states such as Himachal Pradesh, Jharkhand, and Gujarat have metered 100 per cent distribution transformers, Rajasthan, Maharashtra, and Haryana have achieved only a third of their target, according to data on the IPDS portal.
 
The deadline for 100 per cent DT metering is according to the commitment made by a state under the Ujwal Discom Assurance Yojana (UDAY). UDAY aims for the financial and operational turnaround of the beleaguered discoms by 2019. The IPDS for urban and Deen Dayal Upadhyaya Gram Jyoti Yojana for rural electrification are the two primary schemes under UDAY.
 
Rajasthan has completed only 25 per cent of the DT metering when it should have completed 100 per cent at the end of June 2018, according to targets set under UDAY. The reason, officials said, is the baggage of pending works under the erstwhile Restructured Accelerated Power Development and Reforms Programme (R-APDRP), which is now subsumed under IPDS.
 
“Till now we have completed the feeder and DT metering of towns that came under R-APDRP, but for those under IPDS, the tender process is underway and we would complete it till June 2019,” T S Sharma, chief engineer at Rajasthan’s power utility, said.
 
A senior official said the contracts to install smart meters are mostly awarded to small contractors which do not have special expertise. “Smart meter installation is thereby facing issues because the limited financial capacity of small contractors. As the nodal agency, we do not encourage petty contractors, but the decision ultimately is in the hands of the discoms,” he said.
 
Slow tender processes have also hurt IPDS programmes such as system strengthening which entails improving the last time power distribution infrastructure to reduce losses, information technology enablement of towns for real-time monitoring and setting up an enterprise resource planning for better discom management.

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Series concludes