Delhi's power supply controversies tell us more than we realise. There are three complaints: the power tariff hike is unwarranted; the private distribution companies (or discoms) that came in three years ago are making profits without showing efficiency gains; and the overall power situation is still unsatisfactory.
What do these tell us? First, that citizens are now capable of organising themselves in the cities, if there is a specific target that they have in mind (in this case, the private discoms). And their grievance gets amplified and heard when politicians and the media echo their voice.
Conclusion: any private sector company that thinks it can get away with non-performance in an infrastructure sector that has paying customers, had better think again.
Second, the standards that people come to expect from the private sector are different from those they accept from the government, especially when there are visible performance benchmarks.
No one complained all these years when transmission and distribution losses on Delhi's power system, as a public sector monopoly, climbed to as high as 63 per cent in some parts of the city (yes 63 -- think about it).
That's because the losses were being paid by a state subsidy, which gets hidden in the budget and people don't realise they are paying anyway.
Today, that 63 per cent has come down to 50 per cent in three years, but people are angry because in other parts of the city it is either 41 per cent (down from 52 per cent) or 33 per cent -- and everyone is suddenly conscious of these numbers.
BSES of the Anil Dhirubhai Ambani group (which is the discom under fire) can shout for all it wants that it has met the targets laid down under the privatisation programme, and that the situation is improving every year, but that is not good enough.
If people are being asked to pay more electricity across the city because in some places the T&D losses are higher than in others, they will complain; and the fact that you have a supine power regulator in the city is of no consequence. The battle is not fought in the regulator's office, but out in the open and the damage to reputation can be substantial.
The third lesson is for Anil Ambani himself. It is not enough to make great presentations and wow everyone with financial deal-making. Running a business requires focus, sustained application, team-building and meeting customer expectations.
The Delhi power distribution system was privatised in the month that Dhirubhai Ambani died, so Anil has been at the helm of the two BSES discoms in Delhi throughout their existence. It is a period when he fought other battles, but then he didn't have too many other business responsibilities, so what was he doing?
And will he now get down to delivering results that compare with the Tata discom in the city -- or will he let elder brother Mukesh smirk in his corner that only he knows how to build businesses?
As for public policy, this episode is a powerful argument in favour of (and not against) privatising more infrastructure. First, privatisation frees the politician from making promises that he does not deliver (like enough power supply, or 24x7 water).
Instead, the politician can join the citizen and point his finger at the private sector provider -- and demand performance! Second, this automatically pushes the system towards greater efficiency -- the private sector is asked to show that it is in fact more efficient and can deliver better results.
Third, it brings out the hidden subsidies in the system and encourages rational user charges. This helps reduce waste (you won't waste electricity if you're paying for it), it takes away the load on the Budget (most states are virtually bankrupt), and it cuts out the urban mafias that today organise the theft of power and water.
The danger of privatisation is of course crony capitalism, and the absence of correctives if things go wrong. But we have also learnt that competitive market structures and open access are better than local monopolies, and seen that public outcry can be an effective safeguard.
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