Discovery of Gujarat Series
By Rotarian W.U. White
(This article was originally published in 1940. Here’s its reproduction)

Electric Supply in Ahmedabad

Ahmedabad has always rightly been regarded as a progressive city in so far as the development of her public services is concerned, and in no direction has this spirit of progress been more marked than in the development of the use of electricity. In evidence of this it is of considerable interest to note that when the city fathers of something over a quarter of a century ago first heard that it was intended to start an electricity company in Ahmedahad, they petitioned the sponsors of the project not to introduce what they then considered to be a dangerous and undesirable innovation into their old world city. What an interesting contrast this makes with conditions in Ahmedabad today? Her well-lighted streets and up-to-date water-supply and drainage arrangements challenge comparison with any city in India and electricity has come to be regarded as one of the every clay essentials of the life of the community.

There is no more fascinating study than the gradual and increasingly rapid spread of electricity to all classes of the community in Ahmedabad during the past 26 years. These years have seen the conversion of electricity from a comparative luxury to an amenity within the reach of almost the humblest purse. Statistics are sometimes apt to be misleading, but it is interesting to note that in the year 1916, which was the first full year working of the Ahmedabad Electricity Company, the total number of units sold during the year to the public and the Municipality for all purposes was 1 lacs. Today the Cornpany’s average daily sales are considerably in excess of 1 and half lacs units. During this same period the annual Municipal consumption has increased from 42,000 units to more than 60 lacs. These two examples give some idea of the enormous ‘growth of offtafe since the inception of the Company. We could quote many others.

Municipality’s Progressive Policy

Ahmedabad citizens owe much to the progressive policy which has been consistently adopted by their Municipality, which have not only insisted on well-lighted streets in every part of the town but have employed electricity for their water-supply and drainage schemes, thus ensuring the highest measure of efficiency for these important branches of the public service. The Municipality have also recently installed automatic electric lights to deal with increasing traffic in the city, a further example of progressive methods. The Supply Company, too, must be given a share of the credit for these developments, for without the aid of the very low rates at which the Company is supplying energy, we venture to suggest that such progress would have been impracticable.

Advantages of Electricity

It would perhaps be of interest to investigate the reasons for the enormous increase in the consumption of energy which has occurred since electricity was first introduced into Ahmedabad.

The answer is not far to seek, and it is probably unnecessary to dilate here upon the undeniable advantages of electric supply as every person who reads this article has had experience of them in one form or another. For 1ighting purposes the electric lamp is cooler, cleaner and more efficient than any other yet known form of artificial illuminant. The only factor which has hitherto prevented its universal adoption has been the question of cost. This problem, however, is rapidly becoming less and less important as with increasing consumption and improved service the price of the commodity is continually being reduced, and in the not far distant future it is reasonable to assume that electricity in addition to being, as it is today, the most efficient lighting medium, will also be the cheapest. Only one factor can prevent this hope from being realised,-the Electricity Tax on which we shall have some comments to make later in this article.

The uses of electricity, however, are very far from being restricted to lighting. The electric fan wherever power is available has completely ousted the old fashioned Punkah air-conditioning; though as yet in its infancy, it is predicted by the experts to be certain to make tremendous strides forward in the next few years. Electric refrigerators and cooking appliances are becoming increasingly popular. Electric pumps are becoming more and more widely used. But possibly the most striking advance in the use of electricity in India, and in particular in Ahmedabad, has been in the field of industrial power supply. The textile industries are taking increasing advantage of the undeniable superiority of electricity in the operation of all kinds of machinery, and more and more mills and factories in Ahmedabad are taking power from the Supply Company’s mains on account of its cheapness and reliability. There is another important factor which influences the use of purchased power, that is the freedom from Power House worries which it gives to the user, who, not only can concentrate on his production problems but is saved the heavy capital expenditure necessary to provide the duplicate plant which is essential for absolute security.

Ahmedabad Electricity Co. Early Struggles

The history of the Ahmedabad Electricity Company, like that of the city it serves, is one of progress. The Company was formed in 1913 with its headquarters in Bombay. The Board of Directors has contained many well-known names including the late Sir Jarnshedjee Jeejeebhoy, BART., the late Sir Vithaldas P. Thackersey, Kt., the late Khan Bahadur Sirdar Rustomji Jehangirji Vakil, Sir Purshottarndas Thakurdas, Kt., C.I.E.,M.B.E., Ambalal Sarabhai Esqr., Sir Kikabhai Premchand, kt., Sir Chunilal V. Mehta, K.c.s.I, and Chamanlal G.Parekh, Esqr. Messrs. Killick, Nixon & Co. are the Company’s Managing Agents.

The original Power Station was situated at Shahpur Road, Ahmedabad, and the plant then consisted of three 94 K. W. Diesel Oil Engines. Supply to the public was commenced in February 1915, and by September of that year, 261 consumers had been connected to the Mains and 268 street lamps were in commission. The delay between the time the Company was formed and the date of giving supply was due to the late delivery of the 3 Diesel Sets ordered from Europe owing to the outbreak of the Great War. In fact during the war years (1914-1918) the Company’s activities were frequently severely hampered by the difficulty experienced in obtaining plant, cable and other materials. Many extensions to the Company’s Mains which would otherwise have been carried out were of necessity retarded. In fact the early years of the Company’s history were trying ones in more ways than one, and a variety of unforeseen and unfortunate circumstances combined to prevent the steady growth of consumption which would otherwise most certainly have occurred. Apart from its effect on delivery of materials and plant from Europe, the War was responsible for a general rise in the cost of labour and all classes of materials which was bound to react unfavourably on a Company which had only just started to operate. In the winter of 1917-18 an exceptionally severe visitation of plague was experienced in Ahmeciabad. To make matters worse, this was followed the next winter by the devastating epidemic of influenza, and the two caused a very heavy death roll. But there was another aspect of the dual outbreak. So panic-stricken did the inhabitants become, that it was estimated that at one period no less than two-thirds of the total population had left the city. However, in spite of these adverse factors the Company began to expand its activities, and in 1917 the shareholders received their initial dividend (4% less tax). That year was also notable for the fact that two mills started to take electric supply from the Company for power purposes, -The Advance Mill and The Jubilee Mill. Previously the Company’s business had been restricted to lights and fans, and small power. Soon the Company’s available plant was loaded to its full capacity and in 1918 it became necessary for the Company regretfully to notify its inability to accept any new applications for supply, as, after making provision for all the contracts then existing, the capacity of the plant was insufficient to meet further demands upon it. It was at that time impossible to obtain plant from Europe under any conditions owing to the War, and the outlook for the Company must indeed have been a gloomy one, as the plant was running for long periods at full load with no standby plant available in the event of a breakdown and no prospect of obtaining any, while the natural expansion of the Company perforce completely ceased-a most undesirable position for a young and growing concern. During this period the supervision needed to prevent an overload and consequent breakdown must have been very considerable, as opportunities for proper overhaul were non-existent. In 1919 to add to the troubles of the Company grave riots took place in the city and attempts to put the Power Station out of action were only frustrated by the loyal behavior of the staff.

End of The Great War Brings Relief

In the previous year, however, the Armistice had been signed, war conditions ceased and the Company was able to order two 240 B. H. P. Diesel sets from England to augment the existing and sorely tried plant. Repeated postponements of delivery, however, meant that those sets were not finally received from the manufacturers until 1921 and in the meantime the plant question had become so acute that three additional 240 B. H. P. sets had been ordered. The fact that continuity of supply was maintained throughout this trying period, reflects the greatest possible credit on the staff concerned and speaks highly for the durability of the plant. The extent to which the normal growth of electricity had been retarded during the war is well illustrated by the fact that it became necessary to order Three additional sets of 750 B. H. P. each during this same year (1921). In spite of restrictions imposed on its activities by the adverse conditions we have mentioned, the Company had done sufficiently well to warrant paying dividends each year between 1917 and 1921, and the growing faith in the future of electricity in Ahmedabad is shown by the fact that the capital necessary for the purchase of the three 240 BHP sets was readily subscribed by the existing shareholders. The three original 94 KW. sets which had done such yeoman service, were sold to the Surat Electricity Company in 1922 to make room for the new and larger machines

New Problems

New difficulties now began to face the Company however. There is no doubt that the provision of so much extra plant vas a vital necessity in order to give connection to those applicants for supply who, through force of circumstances, had remained so long on the Company’s waiting list. This involved heavy capital expenditure which under more normal circumstances, would have been spread over a number of years. Much of this capital was, for a time, necessarily unproductive, until such time as the programme of Mains extensions, which had perforce been held in abeyance for so long, could be completed. Consequently dividends were lower during the next two or three years inspite of the fact that new consumers were being connected as fast as they could be dealt with. One reaction of this unavoidable and unfortunate situation was that the shareholders and general public only subscribed a small proportion of the new capital which had to be issued in 1923 to meet the cost of the three 750 B. H. P. sets-this inspite of the fact that the Company’s business was steadily increasing and showed every likelihood of continuing to do so. As a result of this position, an issue of Debentures was floated to provide the remaining capital required. It is a good indication of the difficult times through which the Company had passed since it commenced to operate, that the years 1923-1925 represented the first period during which the Company had had an opportunity of carrying on its business unhampered by the necessity of continually adding to its plant capacity and the first time for many years, when it had had a substantial reserve of plant which was not fully loaded,

Trade Depression

In 1924, when the Company’s plant was at least in a position to deal with increased demands for supply, there was a trade slump which slowed down progress considerably. These conditions prevailed in the following year (1925) also, with the result that the Company failed to pay a dividend for the first time since the Company came on to a profit earning basis. Throughout this period the Ahmedabad Municipality had been very active in adding to the number of roads lit by electricity and generally continued to give a valuable lead by their progressive policy. Consumption of energy for lights and fans, both by the public and the Municipality, continued to increase steadily. Motive Power users, however, were much affected by the prevailing trade depression and little progress was made in this direction during the next two or three years. Some idea of the financial stringency during this period may be gained from the fact that many applicants for supply subsequently cancelled their applications owing to their inability to finance their original intention of taking electricity.

Recovery

Conditions gradually improved, however. The Company resumed paying a dividend (6% less tax) for the year ended 30th September 1926, owing to increased sales and the only outstanding event of 1927 was the cyclone and flood experienced during the monsoon. The Company, however, was the least affected concern in Ahmedabad and continued to function with success, thanks, in no small measure, to the excellence of the materials employed both or machinery and mains and to the skill and perseverance of the operating staff. The presence of electric street lights during the height of the trouble proved of very great assistance and encouragement to the people of the city and to the Municipality.

Reduced Motive Power Tariff

In 1928, a substantial reduction in the Motive Power tariff was introduced and was almost immediately met by a very much increased off-take. To meet this demand, further plant had to be ordered and a 900 B. H. P. Diesel set was installed in August 1929. Early the following year, the Municipality entered into a new five year agreement with the Company, the previous contract having run since 1915. The Company continued to extend its system of mains throughout the city and this was particularly noticeable on the right bank of Sabarmati river, where many new residential suburbs were springing up. Neither the general trade depression of 1930 nor political upheavals in India, whose centre of origin was actually located in Ahmedabad could arrest the public’s increasing appreciation of the various uses of electricity.

Erection of the Steam Station

By 1932, the activities of the Company had expanded to such an extent that more power was required but it was impracticable, owing principally to lack of space to increase the capacity of the Diesel plant in the existing Power-Station. It was therefore decided to erect a new and much larger station operated by steam turbines. A suitable site for the new station was secured near Sabarmati and erection was completed in 1934. Two generating sets of 3,750 K.W. each, were first installed, bringing the total capacity of the new station to 7,500 KW. compared with 2,910 K. W. at the Diesel Station which by this time was once more fully loaded. The confidence of the shareholders in the continued growth of electricity is shown by the fact that the new issue of shares to meet a part of the very substantial capital expenditure which had to be incurred in the erection of the new station, was heavily oversubscribed. This change-over from Diesel engines to steam turbines, was a landmark both in the continued progress of the Company and the city of Ahmedabad. Extensions in the suburbs, where new housing societies were springing up, proceeded apace, until practically the entire residential area of the city and its suburbs was covered by a network of mains and still the public’s demand for electricity for lighting, fans and domestic purposes continued to increase.

Further Motive Power Tariff Reductions

But apart from the necessity of installing a Steam Station to meet the ordinary demands of the city the increased plant capacity enabled the Company to introduce tariffs for industrial power which were framed with the object of providing cotton mills and other power users with energy at really attractive and competitive rates. The response was almost immediate. The supply of low priced power proved of general benefit to the trade and industries of the city and several mills began to take power from the Company in varying quantities. The Municipality too was not slow to take advantage of the more advantageous rates which the Company now found it possible to quote owing to the greater efficiency and consequently lower cost of production of the new Station. A new contract for a period of 7 years was concluded in 1935 to the mutual satisfaction of both the parties, whereby the Company undertook to supply the entire electrical requirements of the Municipality which had by this time extended to pumping and drainage services, as well as still further extensions of the street-lighting system. – In accordance with the Board’s expressed intention of providing cheaper electricity from the new Power Station, substantial reductions were made in 1935, and again in 1936 in the tariffs charged to the general public.

Substantial Reductions to L. & F. Consumers

The 6 annas per unit, rate for lights and fans was reduced to 5 annas per unit rate for the first 10 units with the balance at 4 annas and that for domestic supplies from 2 annas per unit to I anna. The minimum charge was removed altogether-a bold step, as every consumer, whether he takes supply or not, costs the Company a certain amount of money in overhead charges such as billing, meter-reading and interest on the capital expended in financing his service line etc. However it was felt that this was an important factor in the Company’s policy of popularising the use of electricity amongst even the smallest householders, and results show that the removal of the minimum charge coupled with the other reductions mentioned above, did in fact make supply available to an entirely new class of consumer.

Progress

The history of the Company during the four years which have passed since the erection of the Steam Station is too recent to demand any very detailed description. Consumption of electricity for all purposes has increased to such an extent that a turbine of 7,500 KW capacity had to be installed in 1936 and another one of the same capacity in 1939, arid a fifth set of similar capacity is expected to be in operation next year, thus bringing the total capacity of the Station to a figure of 30,000KW., a long road from the three 94 KW. Diesel sets which represented the Company’s total plant as recently as 1920. Further extensions to the plant on a large scale will probably be necessary very shortly. 23 Mills and factories are now taking supply direct from the Company for power purposes, while two more have contracted to take supply. The peak load in 4 short years has grown from 2,000 KW. to more than 10,000 KW, in round figures, 185 miles of streets are illuminated by 6,900 street lamps and today the Company has on its books more than 15,000 consumers as compared with 4,700 when the Steam Station commenced operations in 1934.

Inevitably the progress we have outlined has necessitated large increases in the capital of the Company from time to time. The following figures give a good indication óf the strides forwards which have been made.

Issued Capital

1914 Rs. 500,000
1919 Rs 750,000
1922 Rs 1,00,000
1932 Rs 1,900,000
1934 Rs 3,000,000
1938 Rs 7,500,000

During this period the average return to the original investor (free of Income Tax) has been 5.1%.

The Company’s original offices in Shahpur Road became inadequate and the erection was commenced, on a site at Lal Darwaza, of a larger office building on uptodate lines which has now been completed and which is capable of extending much improved service to the public.

This article would be incomplete without some reference to Messrs. Caliender’s Cable & Construction Co. Ltd., who were responsible for the erection and equipment of the original Generation Station in Shahpur Road and have since acted as the Company’s Mains Engineers. Their wide experience of sound materials afl(l thorough workmanship have been of great value not only to the Company hut also to the Street Lighting equipment in the ‘city which they have installed for the Municipality.

The Future

In conclusion one’s thoughts naturally turn to the future of electric supply in Ahmedabad. What does it hold in store? In so far as the development of the use of electric power in the Mill Industry is concerned we, believe that Ahmedabad Mill Owners are becoming increasingly aware of the great advantages to be derived from “Purchased Power”. As regards the Lights and Fans consumers it has always been the policy of The Ahmedabad Electricity Company to encourage, to the fullest extent, the use of electricity by the small user, and we feel confident that successive rate reductions, and in particular the removal of the the minimum charge, have made it possible for every consumer, no matter how small his needs, to adopt electricity with the sure knowledge that no other form of illuminant with similar advantages is available so cheaply. Unfortunately the electricity tax introduced in 1933 and increased in 1939 falls heavily on the “Lights and Fans” consumer and the present incidence of tax is over 25% of energy charge which considerably restricts the use of electricity. The Ahmedabad Electricity Company has an enviable record of service to maintain and there seems no reason why, in the years to come, the Company should not continue to advance, hand in hand, with the development and progress of the city which it serves.

– DeshGujarat

Editor’s note: Shanakersinh Vaghela – who in recent past faced CBI raid for alleged scam in selling mill land under govt to private parties when he was union Textile Minister – sold AEC to private firm Torrent when he was Chief Minister of Gujarat in year 1998-99. Allegations of scam and financial irregularities in this deal were made when Shankersinh govt took this decision. However as always nothing much happened. The govt sold off its cream company without any logic in 1998 and AEC’s turnover crossed Rs 10 billion mark in 2001-02. In 2004-05 Torrent brought three of its group companies Torrent Power, AEC Limited, Torrent Power SEC Ltd and Torrent Power Generation Ltd under a single, unified brand – Torrent Power. Thus AEC ceased to exist and replaced with Torrent brand.