Developing Business Competence: A model based on Viable Systems

Seminar on “Organisational Restructuring of SEBs” D.V. Ramana
stressing the issue of reduction of T&D losses. As the licensees were not
able to achieve the targets fixed by the Commission, the losses went on
increasing. Following table shows the gap between the proposed and
allowed expenses and losses.
T&D Losses: Proposed and Approved (Orissa)
Proposed Approved
1999-00
Transmission Losses 5.30% 4%
Distribution 40-47 % 31%
2000-01
Transmission Losses 4% 3.70%
Distribution 38 - 42.6% 31.46
Source: Tariff Orders issued by the OERC
So part of the losses reflected by the companies may be attributed to the
non-allowance of the expenses, losses coupled with non-acceptance of tariff
proposed tariff rise.
5) Profit (loss) decreases (increases) with increase in sale volume to the
low-tension consumers.
It is important to note that losses (T&D) vary with the consumer mix. A
division with higher LT consumers will be having higher losses. Following
table demonstrates the same.
Division- A
Division-B
Input Billing Input Billing
LT 40 24 60 36
HT/EHT 60 54 40 36
Loss 22% 28%
The total loss in the system increases from 22% to 28% because the
proportion of LT consumers goes up. So other things remaining constant,
loss increases with the increase in sales to the LT consumers.
Experiments and Experiences of Orissa’s Model: An Analysis
To address the problems of the power sector, the Government of Orissa decided on a
comprehensive restructuring of the entire sector. Some of the steps taken were as
follows;
• Unbundling;
• Devolution of Revenue Management; and
• Corporatisation and Privatisation
The following paragraphs explains the principles underlying these steps and experiences
thereof.
Unbundling
State Electricity Boards (SEBs) were established as vertically integrated organisations to
undertake generation, transmission, and distribution of power. The un-bundling of the
industry is <strong>based</strong> on the realisation that it is possible and desirable to separate the
transportation from the thing transported. In other words ‘Electricity’ as a product can be
2