Regulatory strategy and restructuring - model for Gujarat power sector
Abstract
True reform and restructuring of any state electricity board in India would have to
address the enormous leakage of revenue from the system. This would call for
privatisation of distribution, and change in the institutional mechanism for the
administration of the subsidy. Rather than the detailed regulatory mechanisms which are
being pushed by the central government and the regulators, light and price-cap type
regulation would suit India better. A model plan for change is put forward for the Gujarat
State Electricity Board, which is quite general and could easily apply to other SEBs. A
complete separation of distribution from generation is neither necessary nor desirable.
Existing IPP contracts would have to be extinguished and methods to carry out the same
are suggested. The danger of mounting regulatory risk, either shutting out private power
production, or resulting in massive tariff increases taking place are real.
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