Reforming India’s power sector – M.G.Devasahayam

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Power reforms’, unveiled by Mr Ahluwalia, envisaged dismantling and unbundling of State Electricity Boards (SEBs) to form several companies centred on Generation, Transmission and Distribution, and progressively privatise these unbundled organisations. This model has been a disappointing failure and the reasons identified are: ‘Single–buyer’ model; chain of monopolies; total absence of competition; non-separation of carriage & content; flawed regulatory framework, and cost plus year-to-year tariff setting.

TUNNEL VISION

‘Open access’ has been Montek Ahluwalia’s favourite panacea for all these evils, and he himself describes it: “Allowing generating companies to sell directly to distribution companies and bulk consumers, thus creating a competitive market where producers could take investment decisions based on demand, without relying on power utilities or the State Government. This would bring electricity at par with other goods and services, where competition and market forces determine efficiency levels, investments and pricing”. He had suggested that giving ‘open access’ and copious supply to miniscule bulk consumers of 1 MW and above would ‘empower’ the people and transform India’s power sector. What a ‘tunnel vision’!

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