Private participation in the Indian power sector: lessons from two decades of experience

This book reviews the major developments
in and the lessons learned from the 21-year (1991-2012)
experience with private sector participation (PSP) in the
power sector in India. It discusses the political economy
context of the policy changes, looks at reform initiatives
that were implemented for the generation sector, describes
transmission and distribution segments at different points
in the evolution of the sector, and concludes with a summary
of lessons learned and a suggested way forward. The
evolution of private participation in the Indian power
sector can be divided into different phases. Phase one was
launched with the opening of the generation sector to
private investment in 1991. Phase two soon followed - early
experiments with state-level unbundling and other reform
initiatives, including regulatory reform, culminating in
divestiture, and privatization in Orissa and Delhi
respectively. Phase three, the passage of the electricity
act of 2003 by the central government, followed by a large
increase in private entry into generation and forays into
transmission and experiments with distribution franchise
models in urban and rural areas during the 11th five-year
plan (2007-12) period. In phase four, at the start of the
12th five-year plan (2012-17), the sector is seeing a sharp
reduction in bid euphoria and greater risk aversion on the
part of bidders, who are concerned about access to basic
inputs such as fuel and land. In this context, the report is
structured as follows: chapter one gives introduction;
chapter two presents private sector participation in thermal
generation; chapter three presents private sector
participation in transmission; chapter four deals with
private sector participation in distribution; chapter five
deals with private sector participation in the Indian solar
energy sector; chapter six deals with financing of the power
sector; chapter seven presents emerging issues and proposed
approaches for the Indian power sector; and chapter eight
give updates.