Private Participation In The Indian Power Sector

The passage of India's Electricity Act of 2003 was a signature achievement, moving the sector toward amarket-driven approach that forced potential investors to compete aggressively for generation and transmission contracts. India's 2005 National Electricity Policy recognized electricity as one of the key drivers for rapid economic growth and poverty alleviation in the country. Yet the policy's target--electricity for all and 1,000 kilowatt-hours (kWh) available per capita by 2012--was not met. Despite a 20-year reform process and private-sector participation, the rate of resource augmentation and growth in energy supply has been less than the rate of increase in demand. Numerous challenges need to be addressed before India can overcome severe energy shortages and achieve its desired national policy objectives. Private Participation in the Indian Power Sector: Lessons from Two Decades of Experience examines the home-grown Indian experience with private sector participation in power, identifies emerging risks, and proposes specific actions for government consideration, so that the power sector may fulfill its important role in India's growth story. Much has been achieved, and the Indian power sector can rightfully take its placeamong the bold reformers. Yet a large agenda remains, and a more rigorous focus on implementation, particularly on last-mile reforms in the distribution sector, will be required. Close coordination among variousstakeholders and unrelenting attention to efficient execution through decentralized authority to make technical decisions, together with a robust emphasis on monitoring, evaluation, and transparent sharing of data and performance statistics, will help in achieving this objective.

Electricity is a concurrent subject. And as all of us know, up to 1975, generation, distribution and transmission, all were handled practically only by the State Electricity Boards. The Central Government has entered this sector only after 1975, and has played an important role by contributing about 32% of the total generation capacity of the country, Out of 1,00,000 ckm of high voltage transmission lines, about 50,000 ckm is contributed by Central Government. It will continue to play an important role in future too.The power sector requires an investment of more than Rs. 8 lakh crore so as to have one of the best and contemporary power infrastructures in the world. Private participation is encouraged. The power sector at present suffers from shortages, high level of Aggregate Technical and Commercial Losses, fuel shortages, low Plant Load Factor in some plants, inadequate rural electrification, as also its slow pace, inefficient use of energy, etc. Union Government and States are seized of these problems.This book Indian Power Sector Challenge and Response highlights these problems and also gives some suggestions to combat these troubles. This book will be of immeasurable use to all the technocrats, professionals and investors in power sector.

Massive private investment that complements public investment is needed to close the demand-supply gap and make reliable power available to all Indians. Government efforts have sought to attract private sector funding and management efficiency throughout the electricity value chain, adapting its strategy over time.

India has emerged as a rapidly developing economy in the 21st century. However, to support this growth, India needs to modernize its electricity sector and increase its generating capacity in the coming years. This calls for substantial investment in the sector over the next few decades. The investments must be economically, socially, and culturally consistent with the needs of India. Such investments in the energy sector being long term in nature, appropriate choices must also be made from the perspective of technology and environment This publication focuses on various 'alternatives in development' to ensure future sustainability of India's electricity industry and generate policy options for both developing the power sector and mobilizing foreign resources. It also looks at the critical issue of how India can develop required institutional framework that can promote the modernization of the electricity sector by encouraging endogenous and exogenous sources of funding into specific areas, issues related to technology transfer and sustainable development, the role of donor agencies and climate change funds, etc. A three-pronged research strategy was adopted to untangle the issues facing the electricity sector in India. First, the research team carried out a literature survey covering scientific literature, reports, and policy documents. Second, it studied country-specific cases to understand the lessons learnt from specific outcomes of the work done by other countries. And third, the team interviewed various stakeholders from the private sector, government, multilateral institutions, non-governmental organizations, and academic community. The information thus gathered was finally synthesized and a SWOT (strengths, weaknesses, opportunities, and threats) analysis was carried out. This publication, titled Alternate development paths: scope for mobilizing international resources for funding the power sector in India, will be useful to policy-makers, financial analysts, academics, decision-makers in international development agencies, and those interested in India's power sector.

In September 2012, the Government of India approved a financial rescue scheme to revive the power generation sector. This bailout amounted to about Rs 1.9 trillion and came in response to banks and financial institutions with large nonperforming loans to the power sector. This is the second bailout of the sector in a decade. The first was in 2002 when the government had to convert the outstanding arrears of state electricity boards to central public sector undertakings. The 2002 bailout came to Rs 400 billion in state government bonds to restore the sector to financial solvency. The recent crisis and consequent bailout is more complicated than the 2002 bailout. Power sector developments in the past two decades have brought new players into a traditionally government-dominated sector, and they have also been implicated in the crisis. India has adopted transformative policy changes since the last bailout. A landmark Electricity Act was passed in 2003, superseding all previous legislation. The strategic intent of the act was to promote competition by opening all possible avenues for the procurement and sale of electric power. Subsidiary policies and enabling legislation have advanced this process. Competitive markets have evolved and attracted new investments, largely from the private sector. The institutional structure of the traditionally public sector-dominated industry has also been transformed. Aside from the entry of new private sector participants, primarily in generation, the state electricity boards (SEBs) were unbundled into generation, transmission, distribution, and, in a few cases, trading segments. State electricity regulatory commissions (SERCs) were also established in all the states. Over the next two decades, India faces immense challenges if it is to sustain the 8 to 10 percent growth rate required to end poverty and achieve human development goals. According to the Planning Commission, India needs to triple or quadruple its primary energy supply and increase its installed electricity capacity by at least five or six times its 2004 levels to meet demand in 2032. To accomplish these ambitious goals, India will need a commercially viable power sector. This report presents a diagnostic of the financial and operational performance of segments in the power sector value chain between adoption of the Electricity Act, 2003, and 2011, including the factors that contributed to the recent crisis. The report focuses on efficiency and productivity, whether performance has improved over time, and which states have emerged as performance leaders. Analysis of this kind is not new or unique, but this report aims to integrate historical performance, the current situation, and future projections of the impact of worsening sector finances, and the actions that need to be taken to check the downturn.

I am presenting this study on behalf of the millions and millions of citizens of India who eagerly are waiting to witness the transition from darkness to lightness. Many more cyber cities are the dreams of Indians. Politics Vs Economics , is the prime mover for any national development in the World. I believe every stakeholder is contributing to develop and sustain the Indian Power Sector within the limitations and restrictions of scope and availability. Policy, regulation, legislation , controls, monitoring, implementation, projects, institutions, structures, frameworks, services, finances, revenues, losses, profits, and so on are struggling to excel with infinite permutations and combinations. Research & Development (R&D) in India is not to be neglected in core sectors. R&D is a continual tool towards betterment of the complete supply chain of electricity supply. Ministry of New & Renewable Energy is taking initiatives to conduct solar training programmes. Power Consumption Vs Power Conservation, the balance can be made only by awareness , education and training programmes throughout the World. Energy is always a Global issue. Will Green Energy dominate the Power Sector in India? I believe, Learning by criticism brings in excellence. We all should thank this type of debate, discussions, brainstorming and analysis . It brings out innovations and refinement in thinking and decision making. The perception of constructive criticism should be to find avenues for strengthening the Indian Power System. I am grateful to all the analysts in the energy and power sector who have sacrificed their valuable time in researching and innovating better ways of improving the power systems in the world. I am equally indebted to the great scientists , educationists and reformists who have lived their lives to light the world. I am obliged to understand their pain in transforming the darkness of the world into lightness forever. I hope every reader should participate in saving electrical energy . This book, Energy Crisis in India, is a drive to alleviate the energy crisis. I sincerely request my readers and their associates to join me and the nation in saving energy . Finally from the bottom of my heart we will all remain indebted to the , People who Power the World..

The book provides readers with a clear understanding of infrastructure challenges, how Public‐Private Partnerships (PPP) can help, and their use in practice. Infrastructure bottlenecks are generally considered the most important constraint to growth in many countries worldwide. Historically, infrastructure projects have been financed and implemented by the state. However, owing to the fiscal resource crunch, time and cost over‐runs, and the general poor quality of publicly provided infrastructure, many emerging market governments, including India, have increasingly adopted PPPs with billions of dollars of investment riding on them. The results have been varied – from spectacular airports like the Delhi International Airport Limited with the associated controversy over land use, to the renegotiation of contracts as in the case of Tata Mundra Ultra Mega Power Project. Illustrating concepts with relevant case studies, the book makes the challenges of PPPs understandable to industry and management practitioners as well as students of management, public policy and economics. It is useful to practitioners wishing to avoid the pitfalls in the tricky terrain of PPPs and policymakers wanting guidance in crafting proper incentives. It also helps students gain a holistic and “applied” understanding of this increasingly important and popular model. “Public Private Partnerships (PPPs) in India are currently under stress. A comprehensive treatment of the subject by a long-time and erudite practitioner and a management academic, this book should be useful to students trying to learn the basics, while also being valuable to professionals and policy makers. The book suggests that the Government should hold bidders accountable to their submitted bids, thereby preserving sanctity of contract. This will discourage aggressive bidding which has become a serious and endemic problem. The book also suggests the use of better bidding criteria to mitigate traffic risk in transport projects. Policy makers should pay heed to these suggestions as they consider improvements in the PPP policy regime going forward.”—Arvind Subramanian, Chief Economic Adviser, India/div “For a fast-growing India, infrastructure creation and operation is a great challenge and opportunity. This excellent book combines theory and practice on PPPs, and is very useful for professionals and students alike. With case studies and current developments, the authors bring out issues in India with global experiences as well. A must-read for infrastructure practitioners.”—Shailesh Pathak, Chief Executive (Designate), L&T Infrastructure Development Projects Limited “India’s program of private participation in infrastructure attracted worldwide attention as it became one of the largest programs in emerging markets. As well as the volumes of finance mobilized, it garnered interest because of some of the innovative approaches developed, such as Viability Gap Funding. The Indian PPP story is well captured in this book, which also makes the point that India is seeing project cancellations and failures rise. The authors analyze the factors behind this and point the way to a more robust PPP market that learns from the experiences of the past.”—Clive Harris, Practice Manager, Public-Private Partnerships, World Bank/div