The Indian power sector basically suffers from widespread
shortages of electricity supply. This is due to inadequate
expansion of the generation capacity by the state-owned
electric utilities, poor response from the private sector
players and severe resource constraints. Socioeconomic and
political issues, environmental concerns and mismanagement
of the existing power utilities have become debatable issues
now and then. Therefore, the governments are bringing some
kind of reforms in the sector. However, it has brought only
a temporary relief to the sector. Against this backdrop,
this study focuses on a recent mechanism or an operating
tool called Availability-Based Electricity Tariffs (ABT)
and its impact on the power sector with the case study of
Karnataka. The unscheduled interchange, which is a hedging
mechanism, has enforced the Inter-state sale-purchase of
power and succeeded in transforming the fabric of the Indian
power system operation in an unparalleled manner. To improve
the efficiency of power utilities, the ABT regime will encourage
the generators to produce more power when required and vice-versa,
thereby, reducing variations in the frequency. An attempt
has been made to know the impact of ABT, structure of ABT,
operation and technical norms, financial impact and the
review of overall power sector reforms in the state of Karnataka
to achieve economy and efficiency at the macro level.
Electric power has become a basic human need today. It
is the critical infrastructure on which the modern economic
activities are fully dependent. Hence, the growth of economy
calls for a matching rate of growth in the infrastructure
facilities in India. Therefore, in order to support the
growth rate of Gross Domestic Product (GDP) of 8% per annum
in India, the annual growth rate in power supply needs to
be over 10%. The power sector of India has remained a state
monopoly till 1991 with social objectives. However, to supplement
the public sector investment, government took steps in 1991
to attract private investments in the power sector. The
government permitted 100% foreign ownership of power generating
assets and provided assured returns, a five-year tax holiday,
low equity requirements, and for some private generators,
counter-guarantees were offered against non-payment of dues
by the State Electricity Boards (SEBs). However, these power
sector reforms did not address the poor financial health
of the SEBs. Improvement in the system management and power
shortages still persisted and the sector suffered from Transmission
and Distribution (T&D) losses, high and inadequate metering,
obsolete equipment, theft and subsidy. To surpass this vicious
cycle, government had to take various effective steps under
the reform process. The sector had to be put on an economic
and commercial viability mode. |
