ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Dhiraj MathurSubscribe to Dhiraj Mathur

Dark Homes and Smoky Hearths

It is commonly argued by power utilities that rural electrification is commercially unviable and is responsible for the financial mess state electricity boards are in. This paper examines rural electrification from a socio-developmental perspective and argues that the direct and indirect benefits of rural electrification in reducing the burden on women, its positive impact on health, education and farm income, justifies the expense of network expansion for universal access. It also advocates multiple uses of electricity as this would enhance these benefits, have a beneficial effect on the environment, increase the viability of rural electrification and result in savings on household (total) energy expenditure.

Power Sector

Its obvious importance notwithstanding, the power sector seems to have been overlooked in the budget proposals. Despite the fact that power cuts and poor quality of supply are rampant across the country, the 2004-05 Budget does not include any new proposal or policy announcement for the power sector. With the power situation in the country continuing to remain grim and fast deteriorating in many states due to inadequate generation, transmission and distribution capacity, the government needs to urgently create an environment that enables enhanced investments in the sector.

Setting Risk-Based Returns in Power Sector

This paper attempts to provide a methodology for determining fair returns for a utility based on the risks associated with the particular segment of the sector it operates in. The analysis comes up with a conclusion that makes intuitive sense: that the distribution segment is the riskiest. The central transmission and generation entities operate under long-term contractual arrangements and have been given the highest form of payment guarantee by the Reserve Bank of India (RBI) in the form of access to state finances in case of defaults by SEBs, operate under the least risk. The paper attempts to emphasise the determination of return on equity based on a comprehensive risk evaluation matrix for each entity in the value chain and not a uniform return for the entire power sector.
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