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‘Micro-privatising’ rural power distribution - mass produced community development in Orissa
[top] [end]BackgroundThe electricity industry in Orissa State (population 35 million people) of India has been restructured and privatised. Generation, bulk, and regional distribution have been split into different businesses, Indian and multinational capital companies have taken over ownership, and the institutional stage would appear to be set for profitable growth and development.But all this in itself makes little difference to what actually happens at the village level. Most of Orissa’s 39,000 villages are nominally ‘electrified’, but over a quarter of all the power that is supplied to them is stolen, and in some rural districts less than a fifth of that part of the power that is invoiced is ever paid for. Meters are absent, broken or unread, bills are wrong, undelivered or ignored, and field staff respond only to threats or to bribes. Transformers are burned out because transmission cables are shorted and the loads are unknown, and they remain un-repaired because they will only be blown again (Figure 1). Power may only be available for a few hours a day, or a week, and widely varying voltages frequently damage consumers’ appliances. The tariffs for small domestic consumers, and for irrigation pumps, are in any case set well below the marginal cost of power to the distribution companies, but it is intended that the losses should be cross-subsidised from the profits on power supplied to industrial users. The companies can never make a profit on rural power, but in the present circumstances their losses are such that it would make more sense to withdraw altogether. This is not permitted by the Government Regulator, and it is said that the private owners of at least one of the four regional distribution companies in Orissa are considering cutting their losses and returning the whole business to the State. This would undo the whole restructuring process, which is being presented as a model for the rest of India. The power is not worth paying for, and therefore is not paid for; the vicious circle spirals downwards, and there appears to be no remedy. [top] [end]Micro-privatisation - a new approachA new micro-privatisation initiative, however, appears to have the potential to make an improvement. A study by the Xavier Institute of Management (XIM) in Bhubaneswar found in 1996 that in a few villages the people themselves had got together in an effort to put things right. They were informally collaborating with the local linesmen, often with informal inducements, to control unauthorised power use in their villages (Figure 2), and to facilitate meter reading and bills collection, in return for improved power supply. In one case the village people had even paid for a new transformer.We concluded that it might be possible to learn from these informal initiatives, and actively to promote similar local groups to take over the village level distribution task from the power supplier. Several attempts were made to persuade DfID and other donors to fund a small experiment, without success. In 1999, however, when the privatisation of the regional distribution companies had been completed, the management of BSES, the owners of WESCO and two others of the four companies, agreed to finance XIM to undertake a pilot experiment with 100 villages in Bargarh in the North Western part of the State. They did this without any donor support, and not out of ‘social responsibility’. They realised that this form of community development might be a good investment.
[top] [end]The ‘community enterprise promotion’ procedureThis success has achieved by following a more or less standardised procedure. After some false starts with NGOs and other inappropriate intermediaries, the following system was evolved:
As a result of this initial success, XIM have been contracted to provide the same ‘treatment’ to a further 3000 villages. It is envisaged that the process will be extended throughout the State, at as fast a pace as XIM and its collaborators can manage. Other States are also showing an interest, as their power industries are restructured.
[top] [end]Lessons learnedThe same approach can also be applied to the tens of thousands of small lift irrigation points in Orissa and elsewhere, and indeed to almost any situation where the large-scale provider of a public service is failing to deliver the service to small communities. This undertaking, which has already proceeded beyond the experimental stage, is only one example of the micro-privatisation approach which is already being applied to the delivery of primary health care, education, post office, telecommunications, transport and many other public services.The experience is barely one year old, and much remains to be learned. A number of important lessons have however already evolved:
(See Harper, M., “Public services through private enterprise – micro-privatisation for improved delivery”, 2000, Sage Publications New Delhi and ITDG Publications, London, for further examples of the same approach) [top] [end]Download the original article ‘Micro-privatising’ rural power distribution - mass produced community development in Orissa, India by Professor Malcolm Harper (55 KB)[top] [end]Contents: Boiling Point 45: Low-cost electrification for household energy
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11 July 2007; Last edited:
11 July 2007; Version: 0 | |||||||||||||
Pagename: Micro-privatisingRuralPowerDistribution-MassProducedCommunityDevelopmentInOrissaIndia @HEDON: DTFA | |||||||||||||
