Power reforms in India – the search for an indigenous model for promoting competition

Abstract

Indian power sector reforms have reached a stage from where further progress appears bleak due to the following major problems: the slow rate of addition to power generating capacity; the lack of noticeable improvement in the governance, management and level of service to consumers; the failure of efforts to induct the private sector into distribution; the inability to find a solution to the problem of subsidised supply of power to agriculturists; the chaotic condition of governance of LT distribution with, inter alia, the level of TD the rationalisation or rebalancing of tariffs becoming a losing game because the average cost of supply increases faster than the possible rates of increase of tariffs; and the deficits accumulated over the years imposing an unbearable interest burden limiting the capacity to raise funds in the commercial market. A normative goal-oriented approach was adopted with the objectives of availability, accessibility and affordability to address these issues in a recent paper by the author entitled “Towards a people's plan for power sector reform” which was inspired by the recognition that power sector reforms were a failure because of inadequate appreciation of the objectives of reform. Since the resulting presentation was primarily socio-economic in character, it needed to be elaborated with arguments that would be familiar to professionals from the energy community in general and the power sector in particular. Such an elaboration is the purpose of this paper which articulates corrective actions as part of a totally revised reform programme that would attempt to “remedy” comprehensively all the above problems. The paper then explores the content and feasibility of such a totally revised reform programme with particular reference to the state of Karnataka.