India's Private Power Market: Expanding Private Sector Electricity Distribution

Improving access to electric power is critical for India to meet human development and economic growth objectives. Persistent underperformance by most state-run electric power utilities has been a significant obstacle to meeting these goals, and it has also been slowing India’s interest in decarboni...

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Bibliographic Details
Published in:Policy File 2024
Main Authors: Rossow, Richard M, Singh, Akshat
Format: Report
Language:English
Subjects:
Electric power
Electric utilities
Electricity distribution
Privatization
Online Access:Request full text
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Summary:Improving access to electric power is critical for India to meet human development and economic growth objectives. Persistent underperformance by most state-run electric power utilities has been a significant obstacle to meeting these goals, and it has also been slowing India’s interest in decarbonizing the economy. Given the failure of government reforms, private sector distribution has proven to be a promising solution to improve the operational and financial performance of electricity distribution companies (discoms). This report proposes a road map for state governments interested in undertaking discom privatization. The authors interviewed various government and private sector officials to identify challenges and opportunities based on their experiences. Discom privatization is also politically sensitive, since there is an underlying belief that it has a negative impact on electoral performance. The authors analyzed election data to test this, finding that contrary to popular belief, privatization has no effect on average voting patterns: the average percentage of incumbents voted out of power remains largely consistent in constituencies with private distribution when compared to the state average.