Problems Of Power Sector In India

Problems Of Power Sector In India

There is a need for an introspection and course correction before taking up further amendments in the Electricity Act 2003. Electricity (Amendment) Bill 2014 which envisages segregation of carriage and content has far reaching implications not only for the industry, but also the consumer.

A misguided analogy is being made with consumer choice in mobile phones. Whereas the mobile tariff is based on cost to serve and the tariff is the same for all class of consumers but that is not applicable for the electricity supply industry. Also mobile is a wireless system, whereas electricity is a wired system.

The main justification for enacting Electricity Act 2003 Act was reduction of financial and line losses. The main purpose of the change in legislation was to privatize a public utility. This was done by unbundling of generation, transmission and distribution, that is, making them all separate entities. Even a decade after the Act coming into force the financial crisis has worsened. UDAY and the NPAs of Banks and financial institutions indicate the gravity and urgency of the financial crisis. There is nothing to indicate that change in legislation resulted in reduction of line losses. Line losses have reduced due to improvement in both technology and investment.  Read More…

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