Orissa power sector reforms: promise VRS. Performance; lessons for policy making

Abstract

Orissa pioneered the power sector reforms in the country in 1996 amidst lot of hope and enthusiasm. However, 13 years down the line questions are being asked about the sustainability of reforms. Though even today there is overall support for ther eform process, it is not uncommon to find suggestions or plea for scrapping the reforms on account of the alleged failure of privatised distribution utilities to provide quality service or in carrying out rural electrification. Most studies on Orissa power sector reforms have centred on the model and the process of reforms rather than on any empirical analysis of the performance of the sector after the reforms or any analysis of where it succeeded and where it failed and the reasons for such success or failures. The present study intends to fill this gap in research. The objectives of the Orissa power sector reforms were the following: (i)making the sector financially viable by improving efficiency and aligning tariffs with the cost of supply, (ii) increasing access of electricity and improving service delivery,(iii) ensuring accountability in performance of the utilities and (iv) attracting private investment to the sector. The present study tries to find out as to what extent the reforms have achieved the above objectives. For this purpose using the efficiency and equity frame work the study examines various quantitative variables relating to financial and operational parameters and level of increase in access and consumption of electricity and compares performance of the sector after reforms with the pre reform situation. It also compares the performance of Orissa utilities with the performance of utilities in neighbouring state and the national average. The quantitative analysis was buttressed by in depth interviews and discussions with stakeholders across the spectrum. The study finds that while the financial performance of utilities has improved, there has not been any major improvement in the loss reduction levels of Orissa Discoms. Rural electrification and consumer load growth in LT category have suffered thus limiting the access of electricity. The study argues that unless substantial government and regulatory interventions are made at this stage, whatever benefits have accrued because of the reforms may not be sustainable. Accordingly the study recommends several policy level interventions to make the reforms successful.