Sparking change

The loud, uninhibited laughter of 20-odd children greets us as we enter the DAV Educational & Welfare Society in north Delhi’s Sultanpuri area. It’s mid-afternoon on a weekday and they are in the middle of an English lesson. In another brightly-lit, air-conditioned room, several young women have attended a tailoring class while just a few doors away, young men are learning the basics of electrical repairs.

Even as we look around at these signs of industrious activity, a bunch of girls arrive for their coaching class. Ask them about the centre and its activities and a couple of them proudly hold up their identity cards. On it, DAV Society’s name is preceded by an unexpected name — Tata Power Delhi Distribution (TPDDL).  

What does a power company have to do with tailoring and remedial classes for teenagers? As it turns out, plenty. For the past four years, Tata Power has been taking an innovative approach to cutting last-mile distribution losses in north and north-west Delhi. Instead of bullying the non-paying customers, which doesn’t work for several reasons, it is focusing on improving its customers’ ability to pay, making it easier for consumers to get a metered connection and rewarding those who go legit. 

The strategy has worked. From 53% aggregate technical and commercial (AT&C) losses in 2002, losses are currently down to 13%, and TPDDL is looking to bring that down to 9% in another couple of years. Of the 9%, technical losses will be 7%, which means loss from theft will be virtually eliminated.

Gandhigiri works

A decade ago, when the Delhi government privatised power distribution, Tata Power won the bid for the north circle, an area covering 510 sq km. The good news ended right there — the bid documents had stated that AT&C losses of each of the three Delhi circles (Reliance Energy won the other two) were over 50%.

For north Delhi Power (NDPL), as the Tata-Delhi government joint venture was then known, the actual proportion was even higher: its 53% figure meant that over half the electricity it distributed wasn’t earning any money. Even assuming 10% loss for technical reasons (heat generated while transmitting electricity), that still left 40% unaccounted for. Most of this was theft, which is illegal and continues unabated even now all over India (loss levels in some states are well above 40%).

Tata took a two-fold approach to the problem. On the technical side, it initiated improvements in its network and system that would reduce losses. Typically, electricity is stolen by hooking a wire to the power transmission line. TPDDL, therefore, replaced the regular transmission wires at the distribution end with ‘armoured’ wires where any attempt to cut the insulation to place the hook will result in the hook burning off.

Then, it installed high-voltage transformers directly on the electricity poles to service three to four homes, rather than use large transformers for several houses — the risk of electrocution went up exponentially, making it a natural deterrent against theft. The company now has 23,000 such transformers in areas that had high levels of theft (See: Wired for growth). 

Simultaneously, at the consumer end, it decided to tackle leakage at the last mile. Electricity theft is rampant in Delhi slums, and there are over 200 such clusters in the north Delhi circle. But rather than bringing in the cops or cutting off power to the entire area, Tata Power opted for a form of Gandhigiri.

It roped in NGOs to understand the community and then systematically undertook health, education and employment projects that would improve living conditions in the jhuggi-jhompris (JJ). “Force doesn’t work,” says Praveer Sinha, CEO and executive director, TPDDL. “A distribution company would be seen as an outsider, so there has to be a soft approach to the problem.”

When it launched operations in 2002, NDPL had 800,000 customers. Now, it has 1.4 million customers of which 143,000 are from the JJ clusters (See: Going legit).

Sale of electricity to this community has also increased from Rs.16 crore in FY09 (when the results of these initiatives started showing) to Rs.60 crore in FY12. (See: Trickling up) Granted, that’s microscopic compared with TPDDL’s total electricity sales of Rs.3,565 crore in FY12  but, remember, this income stream didn’t exist 10 years ago. 

All charged up

At the training institute, 20-something Deepak takes time off from his electrician’s course to show us around the neighbourhood. He’s never had a steady job and is looking forward to finishing his training so he can help support his family. As we walk through the narrow streets lined with unplastered brick houses on both sides, he points to large electricity meters outside many houses and then gestures to a transmission line. “Earlier, there used to be several wires hooked on this and fires were very common,” Deepak says. “It’s better to pay Rs.100-200 a month and be safe.”

Safety is only one of the many benefits of having a metered connection in the Sultanpuri-Mangolpuri area. Mobile health vans run by TPDDL offer nearly-free medical services; showing the latest paid electricity bill gets patients free medicines. There’s also free accident insurance cover of Rs.1 lakh available to all those with legitimate electricity connections. 

“Having a regular connection is like a status symbol,” declares Sinha. Certainly, there’s more peer pressure now to stop stealing electricity. For people like Mohammed, who lives in the Bhalla Factory area — the factory closed down years ago but the name continues — an electricity bill is more than just proof of residence and identity. “This shows that the house I live is my own,” he says proudly.

Bridging the gap

TPDDL’s initial survey had highlighted the number of school drop-outs in the area. With no education or professional skills, these people weren’t employable. Most of them ended up as rickshaw-pullers or labourers. “Our objective, therefore, was to bridge the skill-set gap,” explains Sushil Kumar Shrivastava, general manager, TPDDL. A couple of years ago, it set up the Sultanpuri training centre in partnership with DAV, offering the local community a variety of programmes free of cost. Apart from vocational courses like plumbing and tailoring, the centre also holds tutorials for students in grades six to nine. The Sultanpuri centre has 200 students signed up for vocational training and an equal number for remedial classes. “The numbers keep growing,” says Radha Bhardwaj, president of DAV Educational & Welfare Society. Currently, TPDDL runs four such centres and plans to double that by the year-end. 

By 2008, it was apparent that the social initiative was giving a boost to TPDDL’s core, power distribution business. Accordingly, it became even more driven. An area of focus now is drug de-addiction, a major menace in JJ clusters. Shrivastava gives the example of a tour operator from a slum in Model Town, which is part of TPDDL’s circle. While he earned Rs.400-500 every day, all of it went to feed his habit. “He wanted to pay for electricity but drugs left barely anything for him,” explains Shrivastava.

Trickling up

“Moreover, while he could earn, his income was not steady because of the addiction.” In the past four years, the company has conducted over 100 de-addiction camps in the JJ clusters in its circle, treating over 14,000 addicts. “Only someone who earns money can pay for electricity,” says Sinha. “We empowered people and increased awareness.”

While JJ cluster households are not large consumers of electricity (no power-guzzling air-conditioners and washing machines here), switching to metered connections tends to drive down even this consumption. And every unit saved in the JJ clusters — which earns government-subsidised tariffs — can be sold to better paying customers. That is, if a unit of power is bought by the distributor at, say, Rs.9, selling it to a slum consumer would fetch just Rs.1, while an industrial consumer would pay, say, Rs.6. 

The flip side

The feel-good factor in TPDDL’s JJ cluster plan is high, but the impact on the bottomline is negligible. While theft of electricity has certainly come down, scaling up further will be an immense challenge. Theoretically, once you are close to single-digit losses, every incremental loss reduction becomes more difficult. Studies have shown that at 40% loss levels, the annual reduction can easily be over 4% — indeed, TPDDL achieved 5%. But the pace decelerates as the overall loss starts reducing. Experts, too, are sceptical of TPDDL’s initiative to reduce AT&C losses. “If the numbers show that they will cut down theft to single digits, then it is commendable,” says former power secretary Anil Razdan. Certainly, theft hasn’t been eliminated. Sinha admits that stealing of electricity still continues, especially in localities close to the Haryana border. 

For people like Gopal, a rickshaw-puller in Mangolpuri, though, Tata’s motives and objective are hardly relevant. “I wish I didn’t live in a rented room,” he says. “I could also get free medicines if I had a bijli bill.”