World Bank2014-07-092014-07-092014-06-12https://hdl.handle.net/10986/18868This report reviews the evolution of the Indian power sector since the landmark Electricity Act of 2003 (EA 2003, or EA), with a focus on distribution as key to 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 1 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 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.en-USCC BY 3.0 IGOACCESS TO ELECTRICITYACCOUNTABILITYAFFORDABILITYAGGREGATE DEMANDAGRICULTUREALLIANCE MODELALTERNATIVE ENERGYALTERNATIVE ENERGY PROGRAMAMOUNT OF POWERAPPROACHASSETSAUCTIONSAUTHORITYAVAILABILITYBALANCEBENCHMARKINGBENCHMARKSBIDDING FOR CONCESSIONSBILL COLLECTIONBLOCK TARIFFSBORROWINGBUILDING POWER PLANTSBULK POWERCAPACITY BUILDINGCAPITAL ADEQUACYCAPITAL COSTCAPITAL MARKETSCAPITAL STRUCTURESCASH FLOWCASH-FLOWCENTRAL GOVERNMENTCLEAN ENERGYCOALCOAL PRODUCTIONCOLLECTION EFFICIENCYCOMMERCIAL BANKSCOMMERCIAL RISKSCOMPETITIVE BIDDINGCOMPETITIVE POWER MARKETSCOMPETITIVE PROCUREMENTCOMPETITIVENESSCONSTITUTIONCONSUMER GROUPSCONSUMER WELFARECONSUMERSCONSUMPTION LEVELSCONVENTIONAL GENERATIONCORPORATE GOVERNANCECOST OF POWERCOST OF SERVICECOST RECOVERYCREDITORSCREDITWORTHINESSCUSTOMER SATISFACTIONCUSTOMER SERVICEDEBTDECISION MAKINGDECISION-MAKINGDECISION-MAKING AUTHORITYDEVELOPMENT FINANCEDEVELOPMENT FINANCE COMPANYDISTRIBUTION COMPANIESDISTRIBUTION LOSSESDOMESTIC COALDUE DILIGENCEECONOMETRIC ANALYSISECONOMIC REFORMSELECTRICITYELECTRICITY CONSUMPTIONELECTRICITY REGULATORELECTRICITY SECTORELECTRICITY SUPPLYELECTRIFICATIONEMPOWERMENTENERGY MARKETSENERGY MIXEXCHANGE RATESEXPANSION OF TRANSMISSIONEXPENDITUREEXPLICIT SUBSIDYFINANCESFINANCIAL ASSISTANCEFINANCIAL AUTONOMYFINANCIAL BURDENFINANCIAL DIFFICULTIESFINANCIAL INSTITUTIONSFINANCIAL PERFORMANCEFINANCIAL SECTORFINANCIAL SUPPORTFINANCIAL VIABILITYFISCAL BURDENFISCAL COSTSFISCAL DEFICITFORECASTSFRANCHISEESFUELFUEL USEGDPGENERATING CAPACITYGENERATIONGENERATION CAPACITYGOVERNANCE REQUIREMENTSGOVERNMENT POLICYGRID EXTENSIONGRID RENEWABLE ENERGYGROSS DOMESTIC PRODUCTGROWTH RATEHOUSEHOLDSHYDROPOWERINDEPENDENT POWER PRODUCERSINDEPENDENT REGULATIONINEFFICIENCYINFORMATION SYSTEMINFORMATION TECHNOLOGYINFRASTRUCTURE DEVELOPMENTINSOLVENCYINSOLVENTINSTITUTIONAL FRAMEWORKINTERNATIONAL BANKINVESTMENT REQUIREMENTSJOB CREATIONJOINT VENTURESKEY CHALLENGESKILOWATT-HOURLACK OF ACCOUNTABILITYLEGISLATIONLEGISLATURESLENDERSLENDING DECISIONSLIQUIDITYLOW TARIFFMAINTENANCE CONTRACTORSMANAGEMENT CONTRACTSMERCHANTMICROFINANCEMINE DEVELOPMENTMINISTRY OF FINANCEMONOPOLYNET WORTHOPEN ACCESSOPPORTUNITY COSTOUTSTANDING LOANSOWNERSHIP SHAREPERFORMANCE TARGETSPOWERPOWER AVAILABILITYPOWER CONSUMPTIONPOWER CORPORATIONPOWER DISTRIBUTIONPOWER GENERATIONPOWER GRIDPOWER PLANTSPOWER PROCUREMENTPOWER PRODUCERSPOWER PURCHASEPOWER PURCHASE AGREEMENTSPOWER PURCHASE COSTSPOWER PURCHASESPOWER SECTORPOWER SECTOR REFORMPOWER SHORTAGESPOWER SUPPLIERSPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE OPERATORSPRIVATE SECTOR PARTICIPATIONPRIVATIZATIONPROTECTION OF CONSUMERSPUBLIC FINANCEPUBLIC INFORMATIONPUBLIC INVESTMENTPUBLIC POWERPUBLIC SECTORPUBLIC-PRIVATE PARTNERSHIPRATES OF RETURNREGULATORY FRAMEWORKRENEWABLE ENERGYRENEWABLE ENERGY CAPACITYRENEWABLE ENERGY GENERATIONREPRESENTATIVESREVENUE COLLECTIONREVENUE SHORTFALLSRURAL ELECTRIFICATIONSOCIAL IMPACT ANALYSISSOLAR ENERGYSOLAR POWERSPOT MARKETSTATE BUDGETSTATE CONTROLSTATE FUNDSSTATE GOVERNMENTSTATE POWERSTATE SUBSIDIESSTATE SUPPORTSTATE UTILITIESSUPPLY CHAINTARIFF BIDSTARIFF BLOCKTARIFF LEVELSTARIFF STRUCTURESTECHNICAL ASSISTANCETECHNICAL SUPPORTTHERMAL POWERTHERMAL POWER PLANTTHERMAL POWER PLANTSTOTAL COSTSTRANSACTION COSTSTRANSMISSION GRIDTRANSMISSION LINESTRANSMISSION OWNERSTRANSMISSION SYSTEMTRANSPARENCYUNIONURBAN AREASUTILITIESUTILITY OPERATIONSVILLAGESVOTERSWIND10.1596/18868