World Bank recommends reforms in power distribution

The World Bank has suggested that power distribution utilities in India must be freed from Government interference and their management must be professionalized. In a report released by the bank, it suggested the government to give top priority to reforms in the electricity distribution sector.

As per the report:

  • Power distribution companies should have good corporate governance and must be commercially operated.
  • Regulators are suggested to revise tariffs in line with efficient costs, hold utilities to service standards and create a predictable environment for decision making.
  • A credible mechanism should be in place for making regulatory decisions.
  • Power distribution utilities must be held accountable for efficient operation and Banks and lenders should not lend to those that are not credit-worthy.
  • The financial status of the power sector is delicate and hampers its ability to invest in providing better services.
  • Of the total accrued losses of Rs. 1.14 lakh crore, power distribution companies, state electricity boards and state power departments account for the major part of the losses.
  • With over Rs. 3.50-lakh crore debts in the power sector, there have already been two restructuring packages, one in 2001 and one in 2012.
  • The Government giving relief to the banks is not a long-term solution to solve the problem of power distribution utilities.
  • Annual per capita power consumption in India is 800 kWh (kilowatt hour) which is nearly 1/3rd lower than the global average and still around 300 million people do not get electricity.

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Categories: Business & Economy Current Affairs 2017

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