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

Karnataka
INTRODUCTION
CHAPTER - 1
BACKGROUND OF REFORM EFFORTS
The State of Karnataka has a total area of 1,91,790 sq km and a total population of
about six crore. The State receives abundant rainfall and has a large number of rivers
and reservoirs, which act as perennial source of water supply and energy. The State is
well-known for its lush green tropical forests, sandalwood and coffee, hospitable
climate, tourism, friendly people, educational institutions, and of late, its premier role
as the main centre for development of Information and Communication Technology
(ICT) and Biotechnology. The State has been achieving an average State Domestic
Product (SDP) growth rate of about 8 per cent per year in the recent years, about the
same level as the growth rate of the GDP of the country.
The first hydroelectric project in India, Sivasamudram Project, was established in
1902 in Karnataka. That perhaps showed the way, and the State can be justifiably
proud that about 3,673 MW of its total installed capacity (2004-05) of 8,355 MW (44
per cent) comes from this renewable source of energy. Another matter of gratification
for the State is that it was perhaps the first to have a separate utility for generation of
power, the Karnataka Power Corporation Limited (KPCL), which accounts for about
56 per cent of the total installed capacity in the State. KPCL has been functioning as a
generating company since 1971.
The per capita consumption of electricity in 2004-05 in the State comes to 660.04
units per year as compared to the national average of 612.50 units.
The Government of Karnataka was a pioneer in the matter of power sector reforms,
and started its initiatives in this regard from the mid-1990s onwards. The prime
motivation came from the policy formulated by the MoP in 1991 to encourage greater
private sector participation in electricity generation, supply and distribution fields;
followed by the changes in the Electricity (Supply) Act, 1948 to provide for this as
well as changes in the financial and administrative environment to facilitate the
policy 1 . The State Government also recognised that the poor financial health of the
major utility, the Karnataka Electricity Board (KEB) (which was established in 1956),
was draining the fiscal resources of the State, and also that there was need to improve
1 Reform Policy for the Energy Sector: Proceedings of the Government of Karnataka: 30 January 1997.
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