Publication: More Power to India : The Challenge of Electricity Distribution
Date
2014-06-18
ISSN
Published
2014-06-18
Author(s)
Abstract
This report assesses progress in
implementing the government of India's power sector
reform agenda and examines the performance of the sector
along different dimensions. India has emphasized that an
efficient, resilient, and financially robust power sector is
essential for growth and poverty reduction. Almost all
investment-climate surveys point to poor availability and
quality of power as critical constraints to commercial and
manufacturing activity and national competitiveness.
Further, more than 300 million Indians live without
electricity, and those with power must cope with unreliable
supply, pointing to huge unsatisfied demand and restricted
consumer welfare. This report reviews the evolution of the
Indian power sector since the landmark Electricity Act of
2003, with a focus on distribution as key to the performance
and viability of the sector. While all three segments of the
power sector (generation, transmission, and distribution)
are important, revenues originate with the customer at
distribution, so subpar performance there hurts the entire
value chain. Persistent operational and financial
shortcomings in distribution have repeatedly led to central
bailouts for the whole sector, even though power is a
concurrent subject under the Indian constitution and
distribution is almost entirely under state control.
Ominously, the recent sharp increase in private investment
and market borrowing means power sector difficulties are
more likely to spill over to lenders and affect the broader
financial sector. Government-initiated reform efforts first
focused on the generation and transmission segments,
reflecting the urgent need for adding capacity and
evacuating it and the complexity of issues to be addressed
at the consumer interface. Consequently, distribution
improvements have lagged, but it is now clear that they need
to be a priority. This report thus analyzes the multiple
sources of weakness in distribution and identifies the key
challenges to improving performance in the short and medium
term. The report is aimed at policy makers and government
officials, academics, and civil society in the fields of
energy, governance, and infrastructure economics and
finance, as well as private investors and lenders in the
energy arena.
Citation
“Pargal, Sheoli; Banerjee, Sudeshna Ghosh. 2014. More Power to India : The Challenge of Electricity Distribution. Directions in Development--Energy and Mining;. © Washington, DC: World Bank. http://openknowledge.worldbank.org/handle/10986/18726 License: CC BY 3.0 IGO.”
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