Another point easy to make, under the circumstances, is that private sector power is not the answer the country is looking for. Despite Manmohan Singh's assumptions in the 1990s, the argument goes, the private sector did not step in to fill the vacuum created by the public sector in terms of power investment; so there is no reason why anyone should expect better results now. That is, the only way the country is going to get fresh power investment is if the government itself steps up such investment. But this argument ignores the main reason why private investment never took off in the 1990s, and will not take off even now, which is poor policy. Private sector firms planning to invest in the power sector will do so only when there is security of payment, and that is not going to be possible as long as the state electricity boards are the main buyers and are bankrupt. The solution, found in the Electricity Act, was to allow "open access", so that electricity producers could supply directly to select buyers who are credit-worthy. That way, if a firm finds it loses a lot of money through power outages, it is willing to enter into a long-term contract with a supplier for fixed supplies of electricity""the supplier, in turn, is willing to invest in putting up a new plant because he knows he will get his money from such solvent units, as compared to getting it from insolvent state electricity boards. Sadly, however, despite the law being in place, no regulator has allowed "open access" so far, for one reason or the other. Till this fundamental reform takes place, even the public sector will find it difficult to bankroll more than a handful of power projects. |
You’ve hit your limit of 5 free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Smart Quarterly
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app