Report of Indian Institute of Public Administration ... - Ministry of Power

INTRODUCTION
KARNATAKA
EXECUTIVE SUMMARY
The Government of Karnataka initiated the power sector reforms in 1997. The State
Government also announced the reform policy, which aimed at attracting private
sector investments, establishing a regulatory mechanism to promote competition,
improved operational efficiency and cost reduction, and encouraging energy
conservation. The policy professed the restructuring of the Karnataka Electricity
Board (KEB) into one transmission and several distribution companies (DISCOMs)
and redeployment of the staff so as to improve operational efficiency and customer
satisfaction. The policy was very objective and focussed in its approach and spelt out
the Government’s resolve to implement the sector reform on a sustained basis.
ELECTRICITY REFORM ACT, 1999
In pursuance of the policy statement, the State Government issued the Karnataka
Power Sector Reform Act, 1999, which provided for the establishment of the
Karnataka Electricity Regulatory Commission (KERC). It also resulted in the creation
of the Karnataka Power Transmission Corporation Limited (KPTCL) to carry out all
functions of the KEB, (which stood dissolved), pending the formation of four
DISCOMs. Government of Karnataka also gave significant financial relief to the
sector by taking over the loan liabilities of Rs 1,050 crore and by writing off bad and
doubtful debts amounting to Rs 866 crore, and the terminal and pension liabilities of
the staff till the date of restructuring.
RESTRUCTURING EXERCISE
Based on competent professional advice from reputed consultants, the State
Government established four DISCOMs. The new companies were formed on an
urban–rural mix. Subsequently, in 2004-05, one more supply company was formed by
carving out five districts from an existing DISCOM. Karnataka’s experience of
establishing an independent generation company as early as in 1971 was refreshing.
DETAILED POLICY STATEMENT
The Detailed Policy Statement (DPS) issued by the Government of Karnataka aimed
at providing equitable access to basic and reasonably priced electricity service to all
by the year 2010, meeting the entire requirements of commercial and industrial sectors
so as to accelerate economic growth, promotion of environmental friendly energy use,