Power Sector Reforms

This paper presents a new approach to power sector reform, commencing with the objective of universal supply of electricity within 10 years, entitlement of specified quantities at low tariffs for poor households and agricultural pumpsets, and a novel way of restructuring the power structure in the states. Applying these principles and procedures to the power sector in Andhra Pradesh, the plan demonstrates that dependence on government subsidy can be done away with in five years.

Power sector policy in India appears to have locked itself into adverse arrangements at least twice in the recent period. The first was when agricultural consumption was de-metered and extensive subsidies were offered; the second when Independent Power Producer contracts with major fiscal implications were signed by the State Electricity Boards. A third set of circumstances, with the potential for equally powerful forms of institutional lock-in, appears to be in the making with the reproduction of the Orissa model on the national scale. This paper provides an analysis of the social and political context in which power sector reforms have taken place in India. While a state-led power sector has been responsible for substantial failures, is the design of the reformed sector well aimed at balancing efficiency and profit-making on the one hand and the public interest on the other? The discussion of the forces and actors that have shaped the reform processes is intended to contribute to an understanding of how the public interest can best be served in the ongoing effort to reshape the power sector.