Input Based Franchuisee (IBF) : A project initiated by HESCOM

HESCOM is a company predominantly feeding rural area. However due to vast network, low man power and low revenue generation in rural areas, providing good quality reliable power supply in these areas has always remained a challenge for HESCOM. Hence on a pilot basis about 56 feeders in the districts of Uttar Kannada, Belgaum, Haveri and Gadag have been selected for introducing the Input based revenue franchisee concept in HESCOM during December 2004. To make the rural power distribution economically viable, retailing of electricity by outsourcing considering each feeder / Grama Panchayat as a business unit is felt to be the need of the hour. In its endeavor to improve the customer relationship by bringing management expertise through community participation HESCOM introduced the Project. This concept is the first step towards retailing of electricity, which is successfully implemented in HESCOM. During 2008 fresh tenders were called and IBF is changed as Feeder Franchisee work and was awarded to 56 Franchisees. During Sept-2010 again fresh tenders were called and 57 feeders were awarded to Feeder Franchisee work for transparency.

Feeder Franchisee Selection:

• By calling short term two part tenders through e-procurement platform.

Scope of Feeder Franchisee :
• Feeder Franchisee will be responsible for Meter reading and billing through Hand Held Machines (HHMs to be provided by HESCOM) for all the installations LT-1, LT-2, LT-3, LT-4, LT-5 (less than 40 HP), LT-6 installations and DTC Meters ( i.e all installations excluding LT-5 ( 40 HP & above), LT-7 & HT installations) every month.
• Feeder Franchisee will be responsible for collection of revenue from all the Consumers except LT-4 & LT-6.
• Feeder Franchisee will be responsible for Minor maintenance works such as: • Replacement of MNR / Old Electro Mechanical/ Faulty meters. • Jungle cutting as per prevailing rules & at SR rates. The estimation shall be prepared and sanctioned as per prevailing norms.
• Feeder Franchisee will be responsible for Disconnection of default installations and their Reconnection.
•Feeder Franchisee will play a pivotal role in checking power theft and help HESCOM in taking appropriate action.
•Feeder Franchisee will collect all consumer complaints and pass them on to HESCOM. He will also coordinate in solving of the complaints.
•Feeder Franchisee may motivate unauthorized consumers to get them regularized during the regularization drive.

Terms of Payment:

Incentives & Penalties: :

a)The Franchisee will get an incentive at the approved rate as indicated in the contract if the actual business efficiency during the month is more than 97% target business efficiency.

b) Penalty will be levied on the franchisee at the approved rate as indicated in the contract if the actual business efficiency during the month is less than 95% of business efficiency.

Feeder Franchisee Performance is evaluated on the basis of improvement Business Efficiency:

The franchisees are carrying out the meter reading, billing and collection work enthusiastically since fixed remuneration is paid for these works thereby increasing the billing efficiency and collection efficiency of the divisions. At the same time they are putting all efforts to improve Business efficiency for claiming the incentive amounts. The Feeder Franchisee concept is having the advantage that the franchisee also becomes a partner in loss reduction and tries to reduce theft in the system.

The objectives of the Franchisees are as follows: a) To increase the demand by increasing the energy sales month by month. b) To achieve 100% billing. c) To collect 100% of the demand made for the energy sales & also some portion of balance arrears on that Feeder, month by month. d) To detect theft and commercial losses by taking vigilance activities on that Feeder. e) To suggest measures for reducing Technical losses in the distribution network. The overall business efficiency has to be more than 97%, otherwise penalty will be levied. Higher the business efficiency, the Franchisee gets more remuneration. Therefore the franchisees are putting more efforts in collecting the arrears on that feeder besides regular monthly demand on energy sale.