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

BACKGROUND
ORISSA
Orissa was the first State in the country to initiate reform in its electricity sector in a
big way. For this purpose, the State received encouragement from the Government of
India. The Orissa Electricity Reform Act, came into force on 1 April 1996. The
principal objectives of the reform, were as under:
(a) Restructuring of the electricity industry by bringing in improvements in
generation, transmission, distribution and supply functions of electricity;
(b) Development of the industry in an efficient, economical and competitive manner;
(c) To provide avenues for participation of private parties and reduce dependence on
Government funding in the electricity sector;
(d) To improve the quality of service to the consumer;
(e) To enhance operational efficiency and reduce losses;
(f) To provide for a transparent mechanism for development and regulation of the
industry, including tariff fixation and settlement of disputes, through an
independent statutory body, the Orissa Electricity Regulatory Commission
(OERC);
(g) To contribute to economic growth of the State by ensuring better quality of
electricity supply; and
(h) To create opportunities for increasingly rewarding employment for technical
personnel and provide a stable environment for career development in the
electricity sector.
The reform process was conceptualized and the road map for its implementation was
drawn up after an elaborate exercise by taking support of reputed National and
International consulting firms.
IMPERATIVES OF REFORMS
Reforms became imperative since the power sector in the State had become
unsustainable due to various factors as mentioned below:
(a) Vertically integrated monolithic structure of Orissa State Electricity Board
(OSEB), which did not engender either efficiency or effectiveness;
(b) Lack of commercial orientation;
(c) Adverse capital structure;