ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Half-Baked Reform

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The power sector today is a good example of how half-baked reform can bring things to a grinding halt. Having started ‘reform’ from the wrong end of the desirable sequence of measures, the authorities find themselves eating their own words, particularly on matters such as counter-guarantees, and consumers find themselves in as much of a fix as ever before.

Planning and central coordination have virtually been abandoned in the power sector. Clearance by the Central Electricity Authority (CEA) is not required any more for most projects promoted by the states, either because their investment ceiling is below the liberal level that qualifies for reference to the CEA or because there is competitive bidding for the project. This amounts to deregulation. At the same time, there is no functional market for power; distribution is still a monopoly of the government, exercised through the SEB or its licencee. Nobody can set up a generation plant and hope to sell to buyers of their choice; distribution continues to be mediated through the government. Nor has independent regulation acquired teeth. The regulators’ powers are still indeterminate and the many drafts of the Electricity Bill 2000 do not clarify the regulators’ role.

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