Following liberalisation and reform of the economy in 1991-92, the electricity sector also witnessed major policy and regulatory initiatives. The sector, while it was growing rapidly in the eighties, faced issues of a debilitating and serious nature. Losses, especially in distribution, were large, efficiencies were low, and tariff reform was long overdue. Tariff and subsidy policies, and the leakages that resulted inter alia from the tariff and subsidy policies severely affected the viability of the sector. Reform efforts, first the IPP policy which brought in private investments in a significant way, and later the institution of independent regulation, the Central Government’s guidance and direction of reform efforts, unbundling of the sector to lead to corporatisation, legal initiatives to bring in competition, programmes to improve technical and operational efficiency of the sector to effectively procure power on a long term basis on behalf of state governments, have been initiated since then. The changes that these initiatives have brought about, while significant, have not necessarily been in the direction intended, and the core problems of leakage, viability of distribution, tariff reform and competition still remain to be addressed, successfully. In this context, this paper studies the Electricity Sector Reforms and Regulations by undertaking a critical review of the experience of last 10 years with focus on constraints and gaps between the vision and achievements. A report is submitted to the Forum Of Regulators (FOR) as an outcome of this study.
Electricity Reforms and Regulations: A Critical Review of Last 10 Years Experience
Author : Ajay Pandey, Sebastian Morris