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

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
90.39 per cent in 2002-03. It has won several awards for performance in terms of PLF,
reduction of secondary fuel oil consumption and auxiliary consumption. KPCL’s total
installed hydropower capacity amounts to 3,165.95 MW; it also has a small wind
energy unit of 4.5 MW capacity.
The importance of KPCL is in the fact that it is a pioneer in the concept of
‘Restructuring’ of SEBs into separate functional utilities about three decades before
the concept came into vogue in the 1990s. Government of Karnataka can rightfully
take pride in the fact that it had shown the path for “restructuring exercise” to the rest
of the country, and was a forerunner of the reform process!
FACTORS LEADING TO RESTRUCTURING OF KEB
Government of Karnataka realised as early as in 1997 the need for bringing in
additional resources in the electricity sector, and the essential requirement of sector
reforms, which was made amply clear in its proceedings on “Reform Policy for the
Energy Sector”, issued in January.1997. 9 The objective of the reform included
‘attracting private investment into generation, transmission and distribution areas,
improve the level of customer service, and to free scarce Governmental resources for
investment in other sectors where private investment is not forthcoming’. The policy
highlighted the existing and potential shortfalls in energy availability and meeting the
peak demand, and their impact on the industrial and economic development of the
State. Since there was no possibility of the Government continuing its support to the
power sector on the same scale as in the past, leave alone meeting the enormous funds
requirements for building up capacity in the future, the proposed reforms were
considered inescapable.
According to the reform policy, the objectives of the reform of the power sector were
aimed to achieve the following:
i) Attracting enough private investment to the sector in generation, transmission
and distribution, to meet the growing demand for power;
ii) Establishing a regulatory environment which will ensure that generation costs are
kept at a minimum through competitive bidding for setting up capacity and also
ensure that adequate incentives are provided for improvements in operational
efficiency, cost reduction, and enhancement in quality of customer service in the
transmission and distribution sectors;
9 Order No:DE 99 PFC 96 Bangalore, dated 30 th January 1997.
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