Article on privatization of electricity in india
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The power sector in India has witnessed tremendous improvements the last 4-5 years, the path forward however isn’t smooth. There are many challenges to overcome mainly due to the implementation problems faced in our country and the gap that exists between what is actually planned what is implemented. This term paper highlights some of these gaps and attempts to analyze the problem. We analyze the risks prevalent in the industry, and the steps required to overcome these. The government contribution and control over this sector has been immense and needs to be studied in great detail. We have then taken the case of the Orissa State Electricity Board and draw conclusions on how it was implemented and also identify the key lessons that would benefit in the future implementations of a power sector privatization.The power sector on the whole can be divided into three parts Generation, Transmission and Distribution. India has the fifth largest generation capacity in the world with an installed capacity of 152 GW as on 30 September 2009 [1] , which is less than 5% of the global power generation. The installed capacity of India as of July 2008 was 167278.36 MW. The power generation in India is basically fuel based of which thermal power generation dominates. The graph below shows the various means used to generate power and also that thermal power for which coal is a prime input.
2In the generation space, out of the overall capacity of 152 GW, the share of central and state utilities stands at 49.8 GW and 76.6 GW, respectively; and that of private sector stands at 25.8 GW. Even, of the 78.7 GW planned capacity additions during the 11th five-year-plan, central and state utilities together are estimated to add nearly 63.7 GW [5] . Similarly, transmission and distribution is also dominated by Power Grid Corporation and State Electricity Boards.
It is usually assumed that private players would execute the projects with greater efficiency and hence, the implementation issues could be resolved. There would be greater investments in this sector to derive the best and gain a competitive edge while making the business viable. Hence, the technology used currently could undergo a revamp and make great advancement through greater spend in research and development. The foreign player who are currently keen on investment in India’s growth story could bring in better technology, investment and the expertise to carry out large power projects. This would also bring in greater efficiency and as a result of privatization we could see greater number of player competing. The power deficit currently faced by the country could be addressed due to the existence of large number of players and also there could be a gain for the consumers through price wars and existence of a competitive market
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