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WB-Orissa Model of Power Sector Reforms: Cure Worse Than Disease

Author(s): Girish Sant, Shantanu Dixit, Subodh Wagle Publication Date: May, 1998

This paper (by Shantanu Dixit, Girish Sant, and Subodh Wagle, published in Economic and Political Weekly, April 25- May 1, 1998) presents a detailed analysis of the regulatory aspects, (especially the issues of transparency, public participation and direct public accountability) of the Orissa model of power sector reforms and pointing at the serious lacunae in the model. According to the model, the regulatory commission (RC) is the supreme decision-making body, controlling billions of dollars worth of public expenditure. Analysis shows that the provisions related to transparency and direct public accountability in functioning of the RC are of non-mandatory nature and could be by-passed easily. Such lack of transparency, participation and accountability makes the regulatory structure prone for sabotage by vested interests. This combination of enormous authority vested in the RC and "sabotage prone" regulatory structure has serious implications. As a result, this reform package can, at best, succeed in overcoming immediate crisis of low tariffs and poor technical performance, but can not ensure effective social/public control or overall efficiency of the power sector in the long run specially with growing influence of private players. Following the publication of this paper, the Orissa Electricity Regulatory Commission amended its Conduct of Business Regulations so as to make disclosure of the PPA and public hearing mandatory before approval of the PPA by the commission.

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