January 25, 2003

2003: Highlight # 7

Can universal metering and tariff reforms help improve financial viability of power utilities and  resolve the energy-irrigation nexus; at what cost? Kishore and others discuss... 

Power Supply to Agriculture

Reassessing the Options

Avinash Kishore, Abhishek Sharma and Christopher A. Scott

The groundwater boom in India is fueled by a power sector in crisis, financially and institutionally. State electricity boards face massive financial hemorrhage resulting in de-capitalization and de-electrification.

Flat rate regime is held responsible for this state of affairs and a shift to universal metering is being pushed as remedy. However, metering can work only by creating power retailing entrepreneurs as is being tried out in Orissa. Flat tariff regime can also serve the purpose, provided it is tied to effective supply policies. Judicious rationing and reasonable tariff are essential components of a functional flat rate system.

Tariff reforms alone cannot revive the fortunes of power sector. Efficiency improvement at every stage of the supply chain is also important.

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