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Thursday, August 30, 2007

management wizardry

text of letter sent to New Indian Express:

I refer to the report in you columns today (August 28th,’07) under the caption 'pending subsidy release in phases', alluding to a statement made by the CM that pending subsidy amounts of the orders of Rs 2400 crores will be released to the ESCOMS ‘without affecting their working’.

Now, Rs 2400 crores is a lot of money. In quite a few cases, the respective allocations are higher than even the annual revenue earnings of some of the ESCOMS. If their release has to await the benevolence of the CM, then it will require far greater expertise than available at even our IIM’s to manage them ‘without affecting their working’. Besides, this whole arrangement cannot be defined as a business any longer. So, why the pretense of running them as businesses when, by classifying as ‘social services’, the government can earn the goodwill of the ‘aam aadmi’, as also become eligible for exemption from the various central levies?

And, as for industry, business, trade and the upper classes, anyway they are hardly dependent on the ESCOMS for their needs.

an exchange with Dr S

Dr S: Your suggestion of privatization of distribution is a sound one provided it is done in the right spirit and to the honest and competent company. There are any number of companies which would be happy to take over. They will strip all the assets and bankrupt the company and walk a way. That is a worst case scenario. Unfortunately we just do not have many good companies. Still I am all for privatization.

MR: I am surprised at your observations, Sir! Tata’s certainly cannot be termed as fly-by-night operators. They have been in the field from long and doing a good job, particularly in Mumbai, and lately in Delhi. So, have the RPG group in Kolkata and Greater Noida, and Reliance in Mumbai, and now in Delhi. Then you have the Ahmedabad Electricity Supply Co Ltd (possibly belonging to the Torrent group), Surat Electricity Supply Co Ltd, etc, etc, all of whom have been doing a far better job than the Electricity Boards, or their new incarnations - the ESCOMS.

Dr S: But you did not suggest an alternative to nimby excepting to produce power at the mines. Is this a good strategy to have all your eggs in one basket? Should not we have power in different places.

MR: Even London depends on a nuclear power plant across the channel in Graveline in France for a large share of its power requirements. So, what are we talking about? Besides, the chance of disruption of power supply across the grid is far lower than disruption of coal supplies across oceans or across the entire stretch of the sub-continent (all the way from the coal belts in Orissa, Jharkhand, etc). Ideally, the entire Karnataka base load could be on the imported NTPC/ PGCIL power, as well as on locally generated (Raichur & Bellary) thermal power, and the peaking load can be on the local hydel (Sharavati & Kali) power. We have enough capacity for that. All future requirements can be met through imports from NTPC/ PGCIL. Alternatively, KPCL can set up generation capacity in Orissa/ Jharkhand on a power sharing arrangement, and transmit the state’s share through PGCIL’s lines.

Dr S: I have not taken a stand against Chamalapur for that reason. I am against coal. But I am for gas. Gas will not have most of the problems of coal. We are importing coal and we might as well import gas. Of course gas costs far more than coal. But we pay more for externalities in the case of coal. This is some thing we as a society should decide. Do we want "cheap" power over environment or are we prepared to pay for environmental protection.

MR: You have raised valid questions, as also answered a few of them yourselves. I have focused largely on the merits of generating power at pit-head stations and transmitting it to user points, even if far flung, as compared to transporting coal there and burning it. Coal, whether burnt in Talcher or in Chamalapura, will contribute equally to global warming. And, if it has not gone through the benefication process, which invariably is the case in India, half the quantity you are transporting is anyway just muck. In Talcher, you atleast have the possibility of pumping the fly-ash into the used pits and attempting re-afforestation on the surface, neutralizing the harmful effects, even if partially. As compared to that, in Chamalapura, you will land up dispersing the fly-ash over the local land-scape, in the process degrading the air and soil quality considerably, for miles on end.

Even with all the attempts at conservation, when the economy is growing at close to10%, we still need sizable fresh generation capacity addition. Given the overall scenario, India doesn’t appear to have too many options other than exploiting its enormous coal reserves, at least in the immediate future. Yes, it will mean adding to global warming, and gas is perhaps a better option from that perception. But, its prohibitive costs have led to the Bidadi and Dhabol projects, which were supposedly based on it, not even taking off.

There are no easy answers. But there are definitely simpler answers compared to what the government is considering.

Wednesday, August 29, 2007

an exchange with Mr R

On 8/28/07, in response to my posting titled 'no thermal plant in my backyard, please!', Mr R wrote:

Can we not have the law applied to collect monies due. We are seeing it applied to the rich and famous!


My response

Lack of political will to enforce the law, Sir! When Anil Ambani's Reliance Power raises a bill, even Dawwod Ibrahim's henchman in Dharawi (Mumbai) pays up on time, fearing disconnection in case of delays. As compared to that, all it requires here is for a call from the local Corporator's PA to carry on merrily without a sanction or a bill. In fact, a KERC member admitted recently in an open public forum that the non-payers in Karnataka form a far more powerful lobby than the payers. And, quite the height of it all was when a Delhi state cabinet minister was running a full-scale battery charging unit on an unauthorised connection for years together under the erstwhile DESU regime. Of course, things have now changed in Delhi after the take-over by Tata's and Reliance.

Muralidhar Rao

Tuesday, August 28, 2007

an exchange with Ms K

Hi Ms K

I am not asking BMTC to be privatised. I am asking for BMTC's monopoly regime to be dismantled by facilitating entry of reputed Corporate players into public bus transport services sector, in competition with BMTC, even if on a field slightly sloped favouring BMTC, all duly regulated (not controlled) by a properly constituted agency.

As the co-Chairman of BMTC's Commuter Comfort Task Force, I had also made numerous suggestions. They are interested only to the extent of the publicity that it gets them, and after that, it's business as usual.

Competition and competition alone can change things. And, Madame, the cost of its inefficiency and incapacity is huge on the city, and particularly on the urban poor whose cause you otherwise so admirably represent.

Regards, Muralidhar Rao

On 8/23/07, Ms K wrote:

Hi Murali

Recently BMTC announced that it would give all its employees a share in the holdings and allow ordinary people also to buy BMTC shares. I think this is a better move than privatisation - a move towards public-people-partnership rather than public-private-partnership.

You were on BMTC's task-force. You must have heard of Mr. Parameswaran's ideas about feeder and trunk route systems to make BMTC buses quick and reliable. According to his plan one could get a bus from any point every five minutes. With this plan, buses would not come empty one behind the other or not come at all for hours together as is happening now. What's wrong with this idea? Why not support it?

Regards, K

On 8/23/07, Muralidhar Rao wrote:

Hi Ms K

I read the 'urban transport policy' document through and through. It substantiates the points I have been repeatedly making, particularly at para's 23, 24, 53, & 54.

More pertinently, the Ministry of Petroleum & Natural Gas, Government of India, had long before displayed a report on 'Bus Transport Systems' on its website (, salient excerpts from which are re-produced below:

1) Promoting public bus transport should be viewed as a priority in any strategy to improve urban road traffic and in controlling air pollution from automobiles. The country can ill afford the luxury of unchecked growth of private vehicle population. The costs to the country's economy in terms of higher fuel consumption and to the society in terms of health are significant enough to warrant urgent action.
2) Clearly, there is a strong case for promoting private enterprise in meeting transport needs in urban areas.
3) An aspect of public policy that impacts on provision and expansion of public transport either by state owned utilities or by private entrepreneurs, relates to the unviable fare structures imposed by the authority.
4) With improved efficiency, the fare structure can continue to remain low while still providing for overall viability of the operations.

You want a good public bus transport system, and you want the government monopoly BMTC to provide it. For any monopoly to do a good job is like asking for the moon, and for a govt monopoly to do it is like asking for the entire galaxy. Also, no point bringing in the private sector and imposing all kinds of restrictions on it - the result will be Delhi's notorious BLUE-LINE. Unless we change our mind-set over such issues, we will remain stuck for viable solutions, and the Revanna's will rule the roost.

Perhaps you should facilitate Oberoi's getting into providing efficient, non-polluting and cost-effective public bus services before venturing into cleaning up our lakes.

Muralidhar Rao

Monday, August 27, 2007

no thermal plant in my backyard, please!

text of the letter sent to the press:

From Nandikur to Tadadi to Chamalapur, nobody wants a thermal power plant in his backyard, particularly when a major part of the power generated is going to be feeding consumers not in the immediate neighborhood, but in distant Bangalore.

Now, there doesn't appear to be much of an appreciation, amongst the powers that be, that in order to meet the state's demand for power, it doesn't require coal to be transported from afar and burnt here. There is a far more efficient and cost-effective option as has already been amply demonstrated by the NTPC (National Thermal Power Corporation Ltd) - PGCIL (Power Grid Corporation of India Ltd) - KPTCL (Karnataka Power Transmission Corporation Ltd) arrangement, whereby Karnataka is able to tap at Whitefield (in Bangalore) 750MW of power generated at Talcher in Orissa. And, NTPC/ PGCIL will be happy to augment that capacity and supply as much power as is needed by Karnataka, provided KPTCL gets itself into a position to pay for the power on time. To know where that situation stands as of now, all you need to do is to visit the KERC (Karnataka Energy Regulatory Commission) site which will tell you that for purchases of the order of Rs 24,830 million, KPTCL owes KPCL (Karnataka Power Corporation Ltd) Rs 21,046 million any given day, ie a debtors-days figure of an incredulous 309. If I understand the Company Law guidelines correctly, this entire amount will have to be shown under 'doubtful debtors' in the KPCL balance sheet. Given such a scenario, it is surprising that NTPC/ PGCIL even maintains a relationship with KPTCL, fearing as it should be of similar treatment should a maverick politician came on to the scene and issued orders that way.

And, that exactly is the problem. With the interference in the running of the ESCOMS by the politicians, they are not able to collect their monies on time to pay up KPTCL, which in turn is not able to pay KPCL on time, and the vicious cycle perpetuates.

And, the truth of the matter is that this problem can be solved only through privatization of distribution, perhaps on the lines of the model adopted by New Delhi, in the cities. And, as for the rural areas, there is the excellent Hukeri Co-op Society model, which at worst may require a bit of tweaking.

Thursday, August 23, 2007

unshackling the bus transport services sector

letter sent to the press:

Finally, one government, that of the National Capital Territory of Delhi, has realised that as important an infrastructure sector service as 'public bus transport' cannot continue to remain in the hands of the un-organised sector, and has instead to be served by the organised sector. Towards this, the government has now sent out notices inviting EOP (expression of interest) from companies, co-op societies, etc for operating stage-carriage services. And, one of the stipulations is that they should come in with a minimum fleet size of 100 buses.

The NCT transport department needs to be complimented for taking this bold step. But, this is only the first step, and a few more need to be taken if the intended results are to be achieved. They are freedom to choose the routes, and freedom to fix fares. Though, initially, this may lead to a bit of a confusion, within months, things will sort themselves out, and a large part of the traffic problems as well as many of the other problems will also get sorted out. And, very likely you will also have a fare regime lower than that of the DTC, even.

Simultaneously, the government could also think of introducing the congestion tax in the CBDs, maybe in phases.