Universal Service Obligation in Rural Electrification - Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY)

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Universal Service Obligation in Rural
Electrification - Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY)
South Asian Forum of Infrastructure Regulators
(SAFIR)

Mr K Vidyasagar (IAS), Executive Director, Rural
Electrification Corporation
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Genesis of Rural Electrification in India

• The Rural Electrification Programme in India
  initiated in the 1950s.
• In the 1960s focus shifted to energisation of
  agriculture pump sets to enhance food security in
  the country.
• Focus on enhancing access of electricity services
  to rural areas with the Minimum Needs Programme
  launched (1974).
• Focus on enhancing access to the socially an
  economically disadvantaged through the Kutir
  Jyoti Programme (1998).
• All programmes since the Minimum Needs Programme
  have had the objective of achieving universal
  access to electricity services.
• RGGVY intends to do away with the piece meal
  approach and target the lowest possible
  denominator the rural household

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Slowdown in Rural Electrification in India

• Rural Electrification (RE) has been the mandate
  of the states.
• States have undertaken RE work through loans from
  REC and central schemes.
• However with the deteriorating financial health
  of many SEBs, rural electrification slowed down
  in the nineties
• In VI VII Plans, over a lakh villages were
  electrified in each Plan
• From 1992 to 1999, only 17382 villages were
  electrified
• From 2000-2005, number of villages electrified
  were 14620 only

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Central Schemes for Rural Electrification

• THE MINIMUM NEEDS PROGRAMME
• Started in Fifth Plan, Rural electrification in
  remote, far flung and difficult villages
• Partly grants and partly loans
• KUTIR JYOTI
• Launched in 1988-89
• The main objective of the programme was to
  improve the quality of life of the poorest of the
  poor.
• Covered the extension of a single point
  connection to Below Poverty Line households in
  rural India
• 100 grant - especially for the Harijan and
  Adivasi families
• Grant amount released up to 03/2006 - Rs. 61214
  lakh
• KJ/BPL connections released up to 03/2006 Rs.
  71.72 Lakh

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Central Schemes for Rural Electrification

• PRADHAN MANTRI GRAMODAYA YOJANA(PMGY)
• Launched in 2000-01 but the Rural electrification
  component was added in the fiscal year 2001-02
• This assistance was extended to the state
  government in the form of a 30 grant
• Main aim was to facilitate delivery of selected
  basic minimum services
• ACCELERATED RURAL ELECTRIFICATION PROGRAMME
  (AREP)
• Introduced in 2003-04
• Interest subsidy of 4
• ACCELERATED ELECTRIFICATION OF ONE LAKH VILLAGES
  AND ONE
• CRORE HOUSEHOLDS
• Launched in March 2004 by merging AREP and Kutir
  Jyoti programme
• 40 capital subsidy and 60 loan assistance
• Capital subsidy released Rs. 385.61 crore

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Status of Village Electrification
As on 31.03.2004
(20)
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Status of Household Electrification
(As per 2001 Census)
Nos. in Crore
(56)
(44)
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Policy Initiatives to Promote Universal Access
to Electricity in Rural India

• Electricity Act 2003
• The Electricity Act 2003 makes it obligatory for
  the government to supply electricity to rural
  areas
• The Appropriate Government shall Endeavour to
  supply electricity to all areas including
  villages and hamlets
• Under proviso to Section 43 of the Electricity
  Act 2003 the Appropriate Commission would need to
  ensure as a part of universal service obligations
  that the national goal of providing access to
  households by year 2009 is complied with.

• The National Electricity Policy (NEP) 2005
• The NEP states that the key development objective
  of the power sector is to supply electricity to
  all areas including rural areas as mandated in
  section 6 of the Electricity Act. Both the
  central government and state governments would
  jointly endeavour to achieve this objective at
  the earliest.
• The NEP also states a need to ensure electricity
  access to all households and that the electricity
  reaches the poor and marginal sections of the
  society at reasonable rates within the next five
  years.

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Policy Initiatives to Promote Universal Access
to Electricity in Rural India

• The Rural Electrification Policy (REP) 2006
• The REP aims at
• Provision of access to electricity to all
  households by year 2009 ensuring access to all.
  
• Quality and reliable power supply at reasonable
  rates USO there but quantification has to be
  undertaken and benchmarks have to be developed
• Minimum lifeline consumption of 1 unit per
  household per day as a merit good by year 2012
  USO related to actual consumption of service.
• The RE Policy also states that in places where
  local distribution has been handed over to users
  association, co-operative society, panchayat
  Institutions or non-Government organization, the
  universal service obligation for the area would
  rest with that institution and the supply
  obligation of the licensee, if any, in that area,
  would be residual

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Evolving Definition of Village Electrification

• According to the new definition of village
  electrification, a village would be declared
  electrified if
• Basic Infrastructure such as Distribution
  Transformer and Distribution lines are provided
  in the habited locality as well as Dalit
  Basti/hamlet where it exists
• Electricity is provided to public institutions
  like Schools, Panchayat office, Health Centres ,
  Dispensaries, Community centers etc
• The number of households electrified should be at
  least 10 of the total number of household in
  the village .
• The Panchayat has to give certificate to this
  effect.

• According to the definition of village
  electrification adopted in October, 1997
• A village will be deemed to be electrified if the
  electricity is used in the inhabited locality,
  within the revenue boundary of the village, for
  any purpose whatsoever.
• This definition was deemed restrictive and did
  not portray a true picture of rural
  electrification in the country thus a new
  definition was adopted in April 2004

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The Rajiv Gandhi Grameen Vidyutikaran Yojana
(RGGVY)

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) - Approach

• RGGVY spells a change in focus in RE a change
  to a supply driven initiative on a national scale
  focused on creating electricity infrastructure
  at the household rather than village level
• RGGVY recognizes the possibility of revenue
  sustainability of RE through franchisee
  development
• All ongoing schemes merged into Rajiv Gandhi
  Grameen Vidhyutikaran Yojana (RGGVY) launched in
  April 2005
• 90 grant and 10 loan
• Programme covers entire country and
  electrification is being undertaken as per the
  new definition

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) Main Aims

• RGGVY Aims at
• Electrification of all villages and habitations
• Provision of access to electricity to all
  households
• Provision of Electricity Connections to Below
  Poverty Line (BPL) families free of charge
• In 5 years

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) Addressing USO Concerns ..

• RGGVY addresses USO concerns through -
• Targeting complete village level electrification
  by 2009 and complete household electrification by
  2012
• Development of a Rural Electricity Distribution
  Backbone (REDB) with a 33/11 KV (or 66/11 KV)
  sub-station in every block and distribution
  transformers of appropriate capacity in
  villages/habitations
• Minimum per capita energy usage of at least one
  unit
• Adequate arrangement for supply of electricity
  without discrimination in the hours of supply
  between rural and urban households through the
  state electricity regulatory commissions and
  state governments

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) Implementation Methodology

• Through the creation of
• A Rural Electricity Distribution Backbone (REDB)
  with 33/11 KV (or 66/11 KV) sub-station of
  adequate capacity in every block where none
  exists.
• Village Electrification Infrastructure (VEI) with
  provision of distribution transformer of
  appropriate capacity in villages/habitations.
• Decentralized Distributed Generation (DDG)
  Systems based on conventional sources where grid
  supply is not feasible or cost-effective

• Implementation methodology
• District based DPRs, to be formulated by SPUs/
  CPSUs
• Execution on a turnkey basis
• Electrification certificate by Gram Panchayats
• Rural distribution management through franchisees

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY)

• Role of the Nodal Agency - REC
• Establishment of framework for implementation of
  project like
•        Technical specifications
•          Procurement of and bidding conditions
•          Guideline for project formulation
•          Field appraisal
•          Franchisees development
• Coordination with implementing agencies/ State
  Governments.
• Release of funds to implementing agencies
• Monitoring and evaluation of project to ensure
  quality and timely implementation.

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY)

• Role of the relevant Ministry
• Ministry of Power
• Framing and notifying Policy for RE
• Sanctioning projects through the Monitoring
  Committee
• Releasing funds (Capital Subsidy)
• Monitoring the programme

• Constitution Role of
• Monitoring Committee (MC)
• Set up under Chairmanship of Secretary Power
• Representation from Planning Commission,
  Ministries of Finance, New Renewable Energy,
  Rural Development and Panchayat Raj
• Committee meets periodically to sanction projects
  and to monitor implementation

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) - Role of CPSUs
CPSUs are providing their services towards the
programme in the following areas        Project
Formulation        System planning        Desig
n engineering        Procurement of goods and
services        Construction/implementation/
Commission        Project monitoring and
supervision of quality of work              
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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY)

• Role of State Governments
• Appointment of independent agency for monitoring
  and supervision of quality of works
• Deployment of franchisees for the management of
  rural distribution
• Determination of Bulk Supply Tariff to ensure
  commercial viability of franchisees
• Provision of requisite revenue subsidy to the
  state utilities
• Adequate arrangement for supply of electricity
  without discrimination in the hours of supply
  between rural and urban households.
• Provision of an authenticated BPL List  
• Enhancement of awareness on electricity related
  issues like Generation, Distribution, Energy
  conservation energy efficiency among elected
  Panchayat representatives.    
•         

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY)

• Role of State Power Utilities
• Formulation of DPRs/Providing data for
  formulation of DPRs
• Provision of additional requirement of upstream
  system (110, 132, 220 KV) for the project area
• Submission of claims of implementing agencies for
  release of funds
• Energisation of works completed and taking over
  for O M
• Providing APL connections
•         
•  
•         

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) Status of Projects
Districts (projects) Outlay in Crore Rs Un-electrified Villages Electrified Villages
Proposal received 568 (607) 30398 117700 399237
Projects under implementation 234 (235) 9696.14 (sanctioned cost) 67602 111936
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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) - Role Of Panchayati Raj Institutions

• PRI would have a supervisory/advisory role in RE
  and electricity supply under RGGVY
• PRIs play an important role of overseeing, in an
  advisory capacity, the delivery of service by the
  franchises
• Subject to commercial viability and
  sustainability of electricity supply business not
  affected , the state government may assign larger
  role to PRIs.
• The state government could also encourage the
  PRIs to
• take on the responsibility of franchisee as and
  when such institutions have developed to the
  extent that they can undertake contractual
  obligations
• raise resources from the market - in such cases
  state government to put in place mechanism for
  independent overseeing of the functioning

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) - Achievement so far

• 2005-06
• Works in 10,169 villages completed including
  intensification works in 350 villages
• 2006-07
• Works in 28706 un-electrified villages and 11527
  electrified villages
• completed
• Cumulatively, works in 50402 villages completed
  up to 2006-07
• Cumulatively, 7.31 Lakh Rural Households
  including 6.72 Lakh BPL
• households connected up to 2006-07
• Franchisees deployed in about 45752 villages
• 2007-08
• Works in 1546 un-electrified villages and 4724
  electrified villages (total 6270 villages)
  completed as on 08.06.2007
• 4.25 Lakh Rural Households including 2.63 BPL
  households
• connected as on 08.06.20

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
Issues and Challenges for the Future

• Need to focus on and give more importance to
  supply side linkages as a minimum of 20000 MW of
  power is required to meet demand from RGGVY.
• Shortage of power is also leading to issues such
  as
• Concerns on proper utilization/ loss of assets
• Viability concerns and credibility issues
• Further resistance in the future
• Magnitude of the task to achieve the targets
  state utilities would have to gear up their
  effort by 10 times or electrify 60 lakh
  households per year
• There is a need to put in place a strategy to
  facilitate productive use of electricity at the
  household level to assist with load development
  and enhance viability

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
Issues and Challenges for the Future

• Recovery of cost of operations -
• Existing field situation evidence indicates that
  no due diligence is being undertaken to
  ascertain potential for recovery of the cost of
  operations
• This may lead to open ended recurring subsidies
  after the programme is complete.
• Franchisee Development is necessary to ensure
  viability of infrastructure
• Most franchisees are today outsourced services
  for meter reading and bill collection
• Concerns on reluctance of utilities to let go
  of revenue rich areas
• Leads to viability concerns and credibility
  issues
• Need for feasibility studies to determine the
  optimal load mix, area coverage and
  number of consumers at the state level

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Rajiv Gandhi Grameen Vidhyutikaran Yojana
(RGGVY) The Road Ahead

• 40000 villages targeted for 2007-08
• 48 Lakh BPL households targeted for 2007-08
• Budget allocation of Rs. 3983 crores for 2007-08

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Thank You