performance of state electricity boards in india1

7/28/2019 Performance of State Electricity Boards in India1

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Simulation and System Dynamics

Analysis of Poor Financial Health of

State Electricity Board of India (SEBs)

Submitted to:

Dr. Arun Abraham Elias

Submitted by:

Brahmeswara Reddy KV ePGP - 01 - 003

Kartikeya Misra ePGP - 01 - 011

Pankaj Gandhi ePGP - 01 - 018

Sanjay Kumar ePGP - 01 - 030

Executive Post Graduate Programme (ePGP 01)


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Indian Institute of ManagementKozhikode

Index

1. Performance of State Electricity Boards in India 01

2. Recovery of Cost Through Tariff 023. Low Plant Load Factor 03

4. Higher Auxiliary Consumption 03

5. Operating Efficiency 04

6. Forced Outages of Thermal Station 04

7. Auxiliary Consumption 06

8. Aggregate Technical and Commercial Loss 06

9. Transmission & Distribution Loss 07

10. Poor Revenue Management System 09

11. Power Balance 10

12. Consumer category wise average Tariff 10

13. Rate of Return on Capital 11

14. Status of HR in SEB 11

15. Analysis of different feedback loop in the causal loop diagram 15

16. SEB Problem Analysis 18

17. Plant Simulation (MS Excel Sheet) 19

18. I think software output 23


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Performance of State Electricity Boards in India

Indian power sector comprises of State Electricity Boards, Central PSU like NTPC NHPC

PGCIL etc and Private sector players like Torrent Power, Reliance etc. SEB holds about 60 %

of countries generation asset and 80 5 of T&D assets.

The poor financial and technical condition of the Indian power sector -and especially State

Electricity Boards (SEBs)- is widely acknowledged. . The World Bank observed "India's power

sector is plagued by capacity shortages, resulting in frequent blackouts, poor reliability and

deteriorating physical and financial conditions. The source of the Indian power sector's ailment is

poor operational efficiency of the SEBs, which forms the foundation of India's power system.

Due to subsidized tariffs to residential and agricultural consumers, low investment in

transmission and distribution systems, inadequate maintenance and high level of

distribution losses, theft and uncollected bills, Utilities are continually in severe financial

distress and have been unable to provide quality supply and efficient services to their

consumers


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Recovery of CostThrough Tariff

Average Cost Average Tariff Recovery as percentage

(Paise/Kwh) (Paise/Kwh) Of Cost

1992-93 128.2 105.4 82.21993-94 149.1 116.7 78.3

1994-95 163.4 128.0 78.3

1995-96 179.6 139.0 77.4

1996-97 215.6 165.3 76.7

1997-98 239.7 180.3 75.2

1998-99 262.5 185.5 70.7

1999-2000 283.6 199.0 70.2

2000-01 303.8 212.0 69.8

The state of financial health of Public Utilities was in the worst shape with huge accumulated

losses and revenue in arrears.The problemscan divided into following parts

Technical Reason

Financial Reasons

HR and Administrative reasons


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Figure of merit for analysis of SEB are as under

Plant Load factor (PLF)

Auxiliary Power Consumption

Efficiency ( Inverse of Heat rate)

Aggregate Commercial and technical Loss

Transmission and Distribution Loss

Theft

Revenue realized

Low Plant load factor (PLF)

This has 2 components first less generation due to unreliability of equipments resulting from

Poor O&M practice, second higher schedule outages. For flawless running he power plants

are required to be stopped for around 1 month in a year for Annual Maintenance of the

plant. Depending on project management skills the time varies from 21 days to 40 days

amount the Power stations.

Higher Auxiliary Consumption

The power plant consumes around 10 % of Energy it produces to run its auxiliaries. This

figure varies from 7.5% to 15 % and is dependent on O&M practices as shown in casual

loop model.


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Operating Efficiency

This is generally expressed as Heat rate of power plant which is inverse of efficiency and

varies from 2400 kCal /unit to 3500 kCal/unit . This is amount of heat required to be burnt

in a boiler of a power plant to produce 1 unit of electrical energy (Lower the better) this is

also dependent on quality of O&M of plant as shown in causal loop diagram.

FORCED OUTAGES OF THERMAL STATIONS (%)

S.No. Agency 1991-921992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-991999-2000

I.SEBs

Northern Region 17.04 15.20 14.50 15.89 15.56 17.10 11.90 18.10 12.90

1 Haryana 30.94 16.39 26.70 35.70 29.74 24.10 22.70 25.10 26.302 Punjab 7.07 8.19 13.10 10.20 7.10 12.80 4.70 12.20 9.50

3 Rajasthan 14.82 7.22 4.90 9.20 10.32 9.40 5.00 14.70 3.704 U.P. 27.67 27.57 22.70 15.86 26.11 29.70 23.20 32.10 25.60

5 Delhi(DVB) 16.50 17.30 26.50 25.90 18.05 26.60 19.80 34.00 22.60


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S.No. Agency 91-92 92-93 93-94 94-95 95-96 96-97 97-9898-99

99-00

Western Region 11.78 11.64 10.30 8.29 8.16 7.80 7.40 8.20 8.40

6 Gujarat 10.62 7.20 7.60 6.60 7.90 7.40 7.80 10.40 12.90

7 Maharashtra 13.67 14.07 10.00 7.79 10.19 10.00 9.40 10.90 9.208 Madhya

Pradesh

16.51 14.63 19.30 12.20 11.00 9.00 10.40 9.90 10.60

Southern

Region12.42 13.69 10.00 8.70 6.84 5.40 5.90 9.80 7.40

9 Andhra Pradesh 11.28 7.46 8.20 6.00 6.42 5.90 4.30 10.00 5.9010 Tamil Nadu 13.80 10.08 10.40 8.10 8.15 7.70 8.20 16.60 10.90

11 KarnatakaPower Corp.

8.81 26.57 8.90 6.70 6.96 2.90 5.30 5.50 2.80

Eastern Region 22.41 29.62 20.10 20.40 20.16 23.80 24.50 23.60 24.90

12 Bihar 27.57 41.90 31.10 21.90 28.36 36.00 48.30 40.80 40.60

12 Orissa $ 26.98 25.90 19.80 33.50 19.00 5.30 5.20 4.30 1.6014 West Bengal

SEB13.90 40.37 24.20 17.90 16.67 14.80 22.00 30.40 31.60

15 WBPDC 8.86 11.51 5.20 8.40 10.37 11.60 13.20 17.00 19.30

16 D.P.L. 44.45 25.92 21.60 22.23 28.01 42.80 35.50 53.70 49.50

N.E.Region 34.39 46.52 33.60 21.31 10.54 35.40 48.50 49.40 52.00

17 Assam 34.39 46.52 33.60 21.30 10.54 35.40 48.50 49.40 52.00

All SEBs 21.10 16.93 15.00 13.50 9.60 14.30 13.60 17.80 15.60

II. Central Sector 13.50 15.33 10.20 11.60 9.06 11.00 10.60 10.30 9.90

1 N.T.P.C.(STPS) 8.30 9.42 6.00 6.40 7.20 8.30 8.70 6.60 5.202 NLC 16.07 27.04 19.10 18.10 7.23 6.90 5.50 8.30 9.90

3 D.V.C. 35.77 41.09 25.70 34.60 22.67 34.20 30.00 37.80 40.60

III.PrivateSector

8.60 10.55 9.87 2.68 1.99 5.90 2.90 2.90 4.60

1 A.E.Co. 14.53 14.34 8.30 3.59 3.74 2.50 2.50 2.80 6.20

2 Trombay 8.38 10.06 12.30 2.10 1.55 6.40 3.50 1.70 3.50

3 C.E.S.C. 7.63 9.06 4.70 3.30 1.79 1.60 2.10 5.00 7.10

4 BSES 30.19 11.80 2.50 3.30 1.80

(IV) All India 15.19 16.19 13.17 12.42 11.95 12.80 12.10 14.50 13.10


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AUXILIARY CONSUMPTION

(%1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-

Actual Actual Actual Actual Actual Actual (Provi.) (RE) (AP)

I.SEBs

1. Andhra Pradesh 5.36 5.35 5.66 6.71 6.14 6.87 7.01 7.41 72. Assam 9.81 8.54 8.09 8.88 8.74 9.32 7.63 6.70 6

3. Bihar 12.87 12.78 12.80 13.53 10.27 12.64 14.33 14.01 13

4. Delhi(DVB) 8.44 NA 8.84 9.09 8.94 8.68 8.85 8.94 7

5. Gujarat 10.39 10.04 9.66 9.25 8.26 9.52 9.58 9.73 9

6. Haryana 5.33 5.46 5.26 5.57 5.98 6.51 2.78 0.87 0HPGC 11.27 11.49 11

7. Himachal Pradesh 0.35 0.27 0.24 0.20 0.30 0.26 0.25 0.23 0

8. Jammu & Kashmir 1.00 1.00 1.00 1.00 0.18 1.00 1.00 1.00 19. Karnataka SEB 0.12 1.47 1.60 2.02 2.59 2.47 2.31 2.59 2

KPC 3.30 3.69 3.51 4.08 5.51 3.69 3.79 4.18 410. Kerala 0.50 0.57 0.38 0.39 0.51 0.46 0.48 0.46 0

11. Madhya Pradesh 9.26 9.30 9.09 8.75 8.64 8.73 8.38 8.68 8

12. Maharashtra 7.91 7.89 7.53 7.64 5.73 7.46 7.40 8.03 7

13. Meghalaya 0.42 0.34 0.35 0.36 0.35 0.42 0.30 0.34 014. Orissa SEB 2.89 3.29 9.60 12.84

OHPC 0.00 1.22 2.87 2.87 1.00 1OPGC 12.82 11.42 11.53 10.23 10.69 10

15. Punjab 4.20 4.92 4.49 4.46 4.36 5.01 4.72 5.34 5

16. Rajasthan 7.33 7.51 7.10 7.48 7.16 7.52 7.52 7.31 717. Tamil Nadu 6.06 6.79 6.41 6.71 6.80 6.80 7.15 7.25 718. Uttar Pradesh 8.74 8.15 7.58 7.59 7.67 7.97 7.49 7.84 7

19. West Bengal SEB 11.14 10.73 10.90 12.03 10.91 11.66 12.14 11.67 10

WBPDC 9.83 9.99 8.86 9.75 9.74 10.06 9.60 9.64 10

Average of SEBs : 6.91 6.96 7.44 7.11 6.57 7.15 7.04 7.28 7.

Electricity Departments

1. Arunachal Pradesh 7.90 6.80 6.45 8.49 7.62 7.63 7.51 6.79 7

2. Goa 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

3. Manipur 7.90 7.00 7.41 7.50 4.80 7.93 8.02 4.14 3

4. Mizoram 3.60 3.70 2.42 2.26 4.12 3.40 3.27 2.88 2

5. Nagaland 7.00 8.00 3.14 9.59 4.64 5.73 5.37 4.64 2

6. Pondicherry 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

7. Sikkim 5.60 5.50 4.80 4.73 4.41 1.27 1.74 2.33 18. Tripura 3.50 1.90 1.74 1.80 1.78 1.85 1.83 1.84 1

Average of EDs : 3.39 3.79 3.53 2.94 2.69 2.63 2

Average - All States & UTs 7.07 7.17 6.56 7.14 7.03 7.27 7.2

Aggregate technical and commercial loss.

The electricity produced in plant is transmitted to location through transmission and

distribution lines spread all over the nation. Not all the electricity produced reaches at

consukers premises a part of which is lost during transmission and distribution lines as

heat . Generally this figure is around 10 % however because of poor network condition it


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varies up to 20 % . Further lot of theft is involved in India as a result further 20 %

Electricity is lost in theft .

Together above loss consists of AT&C loss.

Revenue realized

Not all the energy metered and billed is collected as money at distribution subdivisions of

SEB resulting into lot of arrears.

Rate of returns on Equity

Generally all SEB have negative return on equity and are in loss as shown in figure .

Reasons of poor performance

PLF Efficiency and Auxillary Consumption

The plant load factor is low due to higher outages. The outages are of 2 types

Forced and Planned

The forced outages are due to poor reliability which is a function of poor O&M quality

resulting poor O&M practice and lack of spares due to financial distress

Planed Outages are due to scheduled maintenance to be done once a year for around 1

month. If project management practices are good this also can be brought down to 21 days.

Some power Plants have annual shutdown of 40 days. This is shown in the casual loop

diagram

The overall effect of this is increase in cost of electricity generation

Transmission and distribution loss

This is dependent upon the T&D network healthiness if the network is nicely designed the

losses are less however in India the network design is done on adhoc basis resulting in

higher T&D Loss.


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T & D Losses as percentage of Availbility

(%)

1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01

Actual Actual Actual Actual Actual Actual Provis. (R.E.) (Plan Est)1. SEBs

1 Andhra Pradesh 19.20 19.10 18.90 18.90 33.09 32.49 31.90 31.41 31.04

2 Assam 21.00 20.80 24.90 26.20 26.37 30.06 38.13 37.01 35.03

3 Bihar 20.50 19.00 24.00 25.90 25.26 25.41 23.00 23.00 22.00

4 Delhi 23.40 N.A. N.A. 48.00 49.64 42.31 49.20 47.00 45.00

5 Gujarat 21.10 21.30 20.00 18.30 21.42 21.69 20.14 19.60 19.40

6 Haryana 25.40 25.50 28.50 31.40 32.77 33.37 33.81 27.00 25.00

7 Himachal Pradesh 18.50 17.30 17.40 17.50 18.41 19.21 18.15 17.62 17.28

8 Jammu & Kashmir 45.30 47.70 46.90 48.60 49.97 47.48 47.07 47.01 46.50

9 Karnataka 18.70 18.60 18.90 18.50 18.86 18.56 29.94 30.00 30.00

10 Kerala 21.00 20.20 20.10 20.10 21.37 17.87 21.36 21.14 20.85

11 Madhya Pradesh 22.20 20.20 20.10 19.50 20.59 19.66 19.54 20.70 20.50

12 Maharashtra 16.40 15.80 15.30 15.40 17.72 17.12 17.17 16.99 16.65

13 Meghalaya 12.20 10.70 18.70 17.80 19.48 17.93 20.14 20.41 20.25

14 Orissa (GRIDCO) 23.50 23.40 23.80 46.90 50.38 49.24 48.45 6.00 6.00

15 Punjab 18.70 18.50 18.30 18.20 18.95 17.79 16.83 16.81 16.86

16 Rajasthan 24.50 25.20 25.00 28.50 25.88 26.52 26.52 29.46 22.00

17 Tamil Nadu 17.50 17.30 16.90 17.00 16.98 16.85 16.90 16.75 16.50

18 Uttar Pradesh 24.10 23.20 22.60 22.80 27.96 25.53 26.34 25.50 25.00

19 West Bengal 23.70 22.40 21.10 20.70 20.08 20.00 25.50 28.00 28.00

Average : (I) 19.80 20.20 20.20 22.20 24.63 24.00 24.99 23.72 22.96

II EDs

1 Arunachal Pradesh 34.90 31.60 31.00 36.00 32.62 19.21 21.27 20.47 18.00

2 Goa 20.80 21.80 26.20 28.50 23.54 23.39 29.12 24.33 23.99

3 Manipur 22.50 22.50 22.00 21.50 22.95 21.52 59.07 40.00 30.00

4 Mizoram 28.10 28.00 28.00 27.00 34.35 47.00 45.12 42.50 40.00

5Nagaland 32.40 31.60 30.80 30.00 30.51 29.50 29.00 28.50 29.17

6 Pondicherry 16.00 15.50 15.00 14.50 17.38 13.79 13.46 13.26 13.00

7 Sikkim 21.80 21.50 21.20 21.00 29.24 20.13 20.06 20.03 20.02

8 Tripura 30.50 30.00 30.00 30.00 28.76 29.33 28.50 28.00 28.00

Average : (II) 21.60 21.80 22.80 23.80 23.63 22.19 27.87 23.49 22.20

Overall Average(I&II) 19.80 20.20 20.30 22.20 24.62 23.99 25.02 23.72 22.95

Theft

In India around 20 % if Electricity is lost due to theft . The theft is high due to poor

networkand open transmission lines . Further politicians at many times support theft .


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Unauthorized taping and direct connections in large distribution network and lack of metering on

each transformer center resulted in each additional unit sold in incremental losses by

Utilities.Because of theft consumers are happy since they have to pay nothing for getting

free electricity hence some politicians are encouraging resulting in a reinforcing loop.

Forced outage in T&D

Because of poor network reliability there are many forced outage of lines resulting into poor

customer satisfaction. This poor feedback prevents Administrators in giving high pay and

bonuses to employees which results in reduction of motivation. As shown in Casual loop

diagram poor network reliability is due to poor quality O&M.

Poor Revenue management system

Out of the energy billed, large amount is not collected, besides this, revenue in arrears have

shown increasing trend, the revenue arrears receivable by Utilities from various consumers have

shot of from Rs.14500 crores in 1996-97 to Rs.25000 crores in 1999-00 in just 3 years and the

position is probably made further deteriorated by 2003-04. The average recovery percentage

deteriorated from 82% in 1992-93 to 68% in 2001 -02. This is resulting from poor revenue

management systems.

The problem is further complicated due to irrational tariff structure resulting due to political

interference. This results into less revenue collection


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Power Balance

Year

GrossGeneration (MKwh)

AuxiliaryConsumption (MKwh) % AC

NetGeneration (MKwh)

PurchaseFromOutside*(MKwh)

T&DLosses(MKwh)

TotalConsumption(MKwh) T&D Loss

1980-81 110844 7230 6.52% 103614 78 21325 82367 20.58%

1981-82 122101 8288 6.79% 113813 30 23598 90245 20.73%

1982-83 130624 9029 6.91% 121235 -2 25644 95589 21.15%

1983-84 140177 10142 7.24% 130035 -2 27689 102344 21.29%

1984-85 156859 11650 7.43% 145209 73 31214 114068 21.50%

1985-86 170350 13157 7.72% 157193 1 34195 122999 21.75%

1986-87 187714 14324 7.63% 173390 346 38144 135592 22.00%

1987-88 202093 16317 8.07% 185776 2067 42230 145613 22.73%

1988-89 221396 17363 7.84% 204033 2196 46033 160196 22.56%

1989-90 245438 18674 7.61% 226764 1915 53260 175419 23.49%

1990-91 264329 19603 7.42% 244726 2153 56522 190357 23.10%

1991-92 287029 21011 7.32% 266018 3066 61439 207645 23.10%

1992-93 301362 22060 7.32% 279302 2937 61565 220674 22.04%

1993-94 324050 23670 7.30% 300380 3200 65010 238570 21.64%

1994-95 350490 24795 7.07% 325695 3560 69569 259686 21.36%

1995-96 379877 27221 7.17% 352657 3785 79363 277079 22.50%

1996-97 395889 28804 7.28% 367085 1493 91105 277473 24.82%

1997-98 421747 30684 7.28% 391063 3926 97919 297070 25.04%

1998-99 448563 32521 7.25% 416042 4323 107693 312672 25.89%

Consumer Category-wise Average Tariff (Paise/Kwh)

1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000

Domestic 77.3 84.3 92.8 85.0 105.7 136.2 140.1 157.8 173

Commercial 165.3 186.3 208.0 172.8 239.1 293.6 322.4 354.9 340

Agriculture 16.1 17.9 18.8 19.0 21.2 20.2 20.6 21.1 28.

Industry 171.5 198.2 221.1 219.5 275.5 312.7 320.5 344.5 359

Traction 206.8 216.4 261.4 282.5 346.8 382.2 405.9 414.7 420

Outside 91.0 84.5 111.8 93.5 151.4 138.1 163.6 181.6 193

State 105.4 116.7 128.0 139.0 165.3 180.3 185.5 199.0 212

Overall


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Rate of Return on Capital (%)

Year With Subsidy Without Subsidy With 50 Paise per Unit

Agriculture Tariff

1992-93 (-) 7.6 (-) 12.7 (-) 6.6

1993-94 (-) 6.6 (-) 12.3 (-) 6.9

1994-95 (-) 5.7 (-) 13.1 (-) 8.1

1995-96 (-) 2.2 (-) 16.4 (-) 8.5

1996-97 (-) 7.6 (-) 19.6 (-) 12.4

1997-98 (-) 11.8 (-) 22.9 (-) 15.6

1998-99 (Provi.) (-) 17.9 (-) 30.8 (-) 23.5

1999-2000 (RE) (-) 27.7 (-) 33.8 (-) 26.4

2000-01 (AP) (-) 27.6 (-) 35.1 (-) 28.0

Till this point it is clear that main cause of poor performance of SEB is Poor quality of O&M ,

poor quality Project management and poor revenue management . If refer to the causal

loop diagram we will find that all of these depend upon employ knowledge and skill,

motivation and organizational structure. Further all these depend upon quality of HR system

of SEB .

Status of HR in SEB

Organization Structure

Organization structures were found ill aligned towards consumer orientation; "the raison

detre" of the public utilities in Indian power sector.12The structures further were, hierarchical and

administration centric as opposed to consumer centric. Responsibility and the delegation of

authority were not commensurate. Too many layers and too much formalization led to delayed

decision-making and low response time to changes as well as consumer dissatisfaction.

Human Resource Planning

The human resource planning was poor and ad-hoc which resulted in internal staffing

inconsistencies. There were landslide changes in the realm of technology; consumer

expectations, regulatory framework and level of education, which necessitated the changes in


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staffing norms and competencies required to deal with such changes but there were no

corresponding changes in planning of human resources requirement and skills.

Recruitment and Promotion

The utilities filled in most of the middle and senior level positions by promotion on the basis of

seniority. The recruitment from the market in very few supervisory cadres was also confined to the

respective state only.13 The promotions based on seniority took no cognizance of potential or

competence; these resulted in stagnated pool of employees and mediocre culture. No conscious efforts

were made to build a competency-based organization

Performance Management and Rewards

There was no organizational Vision, Mission statement, organizational objectives and the targets

set. No individual or departmental key result areas were identified; the performance was assessed in

a prescribed format. It was a confidential report writing system; therefore not transparent and

was a subjective one. The performance was neither recognized nor rewarded. The performance

management system did not differentiate between a performer and a non-performer. The performers

and non-performers were treated equally, which was demoralizing to those who had put in

excellent efforts.

There was no synergy in the assessment of organizational and the individual performance; of an

individual performance was assessed for a calendar year whereas the organizational performance

was taken in to consideration for the financial year. No potential appraisal/assessment was

carried out. No performance based reward system was in existence, which severely affected

building of performance-oriented culture in the Utilities.

Training and Development

The training and employee development was a neglected function for almost 5 decades. An

officer, who was not considered to be fit for mainstream functions and who had no knowledge

about the training and the HR was posted to head the training Department. The training needs did


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not emanate form the corporate strategy, current competency level of the employees or future skill

requirement. There was no evaluation of training except the number of persons trained. The training

did not have any link with the other components of HR subsystem. The training did not keep pace

with the changes in the external environment. The training budget was meager and the infrastructure

was poor. All these impaired Utilities' efforts for competence building

Career and Succession Planning

There was sheer absence of succession planning which resulted in non-grooming of middle and

senior people to take over the higher-level positions and shoulder higher responsibility. Role

transformation from an engineer to a manager and leader did not take place. The Utilities did not

identify the career anchors to fit young and promising officers to get best out of them and keep

them motivated. The top positions were filled in by the selection on the file, no potential

assessment, and pre posting training or understudy used to be made.

The promotions took long time in the engineering cadres, which led to frustration.

Organizational climate

The conducive organization climate is one of the factors, which aid survival and growth of

organization. The climate in public utilities was degenerative and not conducive to development and

risk taking.

If we see that this inconstancy in HR management is due to lack of vision in top

management who is generally a politician and appointed politically who has his own selfish

agenda . If we really analyze this is due to Lack of political will to improve for example in

Gujarat the CM has stopped policy of appointing a politician as a chairman of SEB and

appointed handpicked IAS officers who were given enough freedom to work . This has

resulted into good improvement in performance of Gujarat Electricity Board (Erstwhile) .


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Analysis of different feedback loop in the causal loop diagram .

If we see that the financial condition of SEB is poor due to

1. less revenue realization and

2. higher cost of generation. Pl refer table for

The revenue realizations due to low net electricity sold, irrational tariff and poor revenue

realization model. This poor revenue model is due to lack of clear direction and

inconsistency at top as shown in causal loop diagram.

The tariff is irrational due to lack of political will whereas net electricity sold is less due to

high T&D loss, high Theft & high forced outages. All these are due to poor network

condition. If we see the diagram we will find that the T&D network condition is poor due to

lack of maintenance and spares.

However higher the no of units generated higher is the net electricity sold.

The cost incurred for total energy generation is high due to higher cost per unit of electricity

generated in plant this high cost results from poor O&M quality.

Further the net units generated have positive relation with plant reliability resulting from

poor O&M quality.

Now we have come to conclusion that poor O&M quality is main cause of poor

financial condition of SEB.

If we further analyze the reasons for poor O&M quality we will find that it is directly

dependent on availability of spares and O&M practice and project management practice.

Poor O&M practices result into reduction in reliability of machine leading to less PLF , higher

Auxillary consumption . Poor project management skills results into delay of shutdown and

causes higher MTTR. When right quantity and quality of spares are not available

maintenance Engineer comprises by fitting reconditioned spares resulting untimely failure of

equipments.


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Loop 1

Poor financial condition of SEB results into less money available for spare procurement

which reduces O&M quality leading to low PLF and less generation of Electricity. This leads to

higher cost of Electricity and reduction in surplus of SEB.

Loop 2

When financial condition of SEB are stressed no money is left in enhancing installed capacity

of Power Plant. This results in zero growth rate in installed capacity. Hence additional

electricity units are not available for sale resulting into poor financial condition of finances of

SEB.

If we analyse in deep we will find that poor O&M and Project management is a result of

poor motivation and poor knowledge and skills of employees due to organizational and

structural problem of organization. This is a result of Poor HR system and less training

impartment to Employees . HR condition is deeply discussed earlier.

Loop 3

When SEBs are into financial distress less money is available for training and development

of employees which lead to poor moral , knowledge and skill of them which further lead to

poor finances of SEB.

If we analyze further we will find that poor HR Systems is a result of lack of direction and

consistency at top of SEB. The Chairman appointed are political and work in their own

interest and have no will to improve the system. The MD appointed is form IAS who stay for

a small time in SEB before they learn and understand the system they are transferred.

This situation of inconsistency at top is a result of lack of political will to improve condition

of SEB. There is one interesting loop.


18/18

Loop 4

When there is theft of electricity form network public gets free electricity hence such

customers influence the politicians not to improve the system.

Loop 5

Due to poor financial condition of SEB they are not in a position to pay a good package to

employees leading to reduction in motivation .this further leads to poor performance and so

on.

Loop 6

When there are high outages in distribution and blackouts customers are very unhappy. This

leads to a general thinking that the SEB staff is useless and do not deserve any good facility

and bonus and salary. This also results into reduction of moral and motivation. As explained

earlier such poor motivation results into poor performance of SEB leading to poor financial

condition of SEB.

Reference

1. Annual Report on The Working of State Electricity Boards & Electricity DepartmentsBy Planning Commission Government of India , June, 2001

performance of state electricity boards in india1

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