Sweeping electricity reform imminent for India

Vol 5, PW 16 (26 Sep 01) People & Policy

Talk to Enron, AES, Cogentrix and Electricite de France and you'd be tempted to dismiss India's power sector as a 'No Go Zone'.

But if everything goes well there could be some sweeping new electricity legislation in place by the year's end, thanks to power minister Suresh Prabhu andsome ambitious targets in his Blueprint for Power Sector Development. In it Prabhu outlines his principle goals: To provide power on demand by 2012 To make the sector commercially sound and self-sustaining To provide reliable and quality power at an economic price To achieve environmentally sustainable power development To promote consensus on the need for reforms Should we be calling it Prabhu's pipedream Consider the odds against him.

Of the 100,000-MW electricity generated in India, only 55% is metered and of this only 41% is realised. The rest is politely described as "lost in transmission" - a euphemism for rampant power theft! Every year transmission and distribution losses work out to a massive Rs20,000cr ($4.34bn).

This year the average gapbetween cost of supply and revenue has widened to Rs0.92 per kilowatt/hour. Vote-bank politics where politicians waive electricity bills to huge sections of their constituency result in a skewed tariff structure and harmful subsidies that have pushed India's state electricity boards into bankruptcy.

Add the lack of reliable data and the sector is a veritable minefield for foreign investors. But these hurdles have not deterred Prabhu, whose response is contained in the Blueprint for Power Sector Development and the Electricity Bill, 2001.

What do these two documents hold out Read on..