In September 2012, the Government of India approved a financial rescue scheme to revive the power generation sector. This bailout amounted to about Rs 1.9 trillion and came in response to banks and financial institutions with large nonperforming loans to the power sector. This is the second bailout of the sector in a decade. The first was in 2002 when the government had to convert the outstanding arrears of state electricity boards to central public sector undertakings. The 2002 bailout came to Rs 400 billion in state government bonds to restore the sector to financial solvency. The recent crisis and consequent bailout is more complicated than the 2002 bailout. Power sector developments in the past two decades have brought new players into a traditionally government-dominated sector, and they have also been implicated in the crisis. India has adopted transformative policy changes since the last bailout. A landmark Electricity Act was passed in 2003, superseding all previous legislation. The strategic intent of the act was to promote competition by opening all possible avenues for the procurement and sale of electric power. Subsidiary policies and enabling legislation have advanced this process. Competitive markets have evolved and attracted new investments, largely from the private sector. The institutional structure of the traditionally public sector-dominated industry has also been transformed. Aside from the entry of new private sector participants, primarily in generation, the state electricity boards (SEBs) were unbundled into generation, transmission, distribution, and, in a few cases, trading segments. State electricity regulatory commissions (SERCs) were also established in all the states. Over the next two decades, India faces immense challenges if it is to sustain the 8 to 10 percent growth rate required to end poverty and achieve human development goals. According to the Planning Commission, India needs to triple or quadruple its primary energy supply and increase its installed electricity capacity by at least five or six times its 2004 levels to meet demand in 2032. To accomplish these ambitious goals, India will need a commercially viable power sector. This report presents a diagnostic of the financial and operational performance of segments in the power sector value chain between adoption of the Electricity Act, 2003, and 2011, including the factors that contributed to the recent crisis. The report focuses on efficiency and productivity, whether performance has improved over time, and which states have emerged as performance leaders. Analysis of this kind is not new or unique, but this report aims to integrate historical performance, the current situation, and future projections of the impact of worsening sector finances, and the actions that need to be taken to check the downturn.
India is home to one of the world's largest populations without electricity access. Traditionally, the Government of India has extended rural electrification using two instruments: consumption subsidies and free connections to households below the poverty line (BPL). This study centers on subsidies for electricity consumption, examine their size, frequency, and distribution to households. It uses poverty as a lens through which to focus more closely on these concepts, asking such questions as how well subsidies are targeted to BPL households. The study findings demonstrate that subsidies cover 87 percent of all electricity consumed by India's households. Furthermore, residential subsidies are large compared to the cost of electricity and the small cross-subsidy amounts taken from non-subsidized residential consumption. Moreover, the vast majority of electrified households receive a net subsidy on their electricity consumption. About 87 percent of subsidy payments go to households living above the poverty line (ABL) instead of to the poor, and over half of subsidy payments go to the richest 40 percent of households. The key factor driving this outcome is tariff design. Only some states have highly concessional BPL tariffs. In most states, tariffs for the non-poor are subsidized nearly as much as BPL tariffs. Because non-poor households consume significantly more electricity than poor households, they are eligible for significantly higher subsidies. Owing to the relatively low access rate among poorer households, many of them are unable to take advantage of tariff subsidies.
This study analyzes India s remarkable progress toward achieving universal access to electricity, particularly since 2000, and identifies the remaining challenges ahead. Key supply- and demand-side barriers to adoption of electric connections, as well as program sustainability issues, are examined.
This study assesses the existing barriers for tapping renewable energy and delves deeper into the economic feasibility of renewable energy development in India, and analyses what needs to be done to realize the potential.
Empirical insights on household behavior and electricity consumption patterns in this book reveal that, in Europe and Central Asia, the erosion of tariff based subsidies has disproportionately affected the poor, while direct transfers through social benefit systems have often been inadequately targeted. The book suggests alternative strategies for achieving cost-recovery in the electricity sector in a socially and politically acceptable manner, providing lessons that are equally relevant for other utilities and regions.
The mining industry could play a key role in Africa s energy sector, since it requires power in large quantity and reliable quality to run its processes. The integration of mining with power system development, with appropriate risk mitigation mechanisms, could bring a win-win solution to utilities, mines, and people at large.
Africa needs power—power to enhance the welfare of its people and expand its economies. But Sub-Saharan Africa’s power sector has the lowest generation capacity in the world. Two-thirds of the regional population remains without electricity and even those with access consume the least among the world’s regions. Businesses say unreliable electricity is a major hurdle. Meanwhile, vast energy resources remain untapped. One possible solution is to leverage the mining industry’s substantial need for power as an anchor for energy infrastructure development. 'The Power of the Mine: A Transformative Opportunity for Sub-Saharan Africa' is the first study to systematically analyze both the potential and the challenges of power-mining integration. The findings show that industry demand for electricity can be a game changer. Mining operations often devote a quarter or more of operating costs to electricity. This consistent, high-volume demand can spur development of national power systems, thus expanding electrification for the populace. As a result, citizens can also benefit from safe, adequate access to electricity. Countries benefit from larger exports and tax revenues, more business and job opportunities, and higher GDP. Utilities benefit from having creditworthy mining partners as a core source of revenue that attracts investment. And mines benefit from the significant cost reductions a stable power grid provides. 'The Power of the Mine' will be of interest to policymakers, researchers, and business analysts engaged in energy infrastructure development.
This report is an output of the technical assistance activity carried out over 2008-2010 to Alternative Energy Promotion Center (AEPC), which is the nodal renewable energy agency of Nepal. This study has been designed to establish a monitoring system for AEPC to continually measure the results of the renewable energy programs against the targets and to organize an evaluation system that measures the impact of micro-hydro installations on rural livelihoods. Given AEPCs highly visible role, the need to develop a system that provides information on a wide range of technical, operational, and financial parameters is similarly high. This study developed a robust yet simple M and E framework for all the programs of AEPC that is focused on the needs of the decision-makers, as well as the interests of the relevant stakeholders. The integrated M and E system encompasses all of AEPCs programs in micro-hydro, solar, biomass, improved water mills, and biogas, and builds its capacity to execute it. The focus has been to develop performance indicators across the entire causal chain from project intervention to on-the-ground impacts. The M and E framework incorporates not only the activities undertaken and the outputs but also the impact on the beneficiaries which is critical to gain a better perspective of the impact of the interventions and to support future planning processes and decision-making. The final impacts of electrification on households and businesses are evaluated using a primary household and enterprise survey. A wide range of outcomes including quality of lighting, income generation, health, education, fertility, womens empowerment, and greenhouse gas emissions reduction are considered. AEPC is now equipped with not only the state-of-the-art monitoring system but also with a trained staff to sustainably manage and add to the system, as required.
India is a leading developing country in providing electricity to rural and urban populations. By late 2012, the national electricity grid had reached 92 percent of India's rural villages, or about 880 million people. Yet, approximately 311 million people-mostly those in rural areas-still live without electricity. Less than half of all households in the poorest income group have electricity. Even among households with electricity, hundreds of millions lack reliable supply and experience power cuts almost daily. Achieving universal access to electricity by 2030 is not fi nancially prohibitive for India. The challenge of providing electricity for all is achievable, ensuring that India joins such countries as China and Brazil in reaching out to even its remotest populations. Policies will need to be aligned with the principles followed in other successful international programs. The potential benefi ts of electrifi cation for those without service are quite high. The benefi ts of lighting alone would approximately equal the investments necessary to extend electricity for all. Households with electricity consume more than 100 times as much light as do households with kerosene for about the same amount of money. Without quality energy services, households often face entrenched poverty, poor delivery of social services, and limited opportunities for women and girls. This book will be of interest to a wide audience, including policy makers, experts and managers in the international development community, and those in academia.
India is home to one of the world's largest populations without electricity access. Traditionally, the Government of India has extended rural electrification using two instruments: consumption subsidies and free connections to households below the poverty line (BPL). This study centers on subsidies for electricity consumption, examine their size, frequency, and distribution to households. It uses poverty as a lens through which to focus more closely on these concepts, asking such questions as how well subsidies are targeted to BPL households. The study findings demonstrate that subsidies cover 87 percent of all electricity consumed by India's households. Furthermore, residential subsidies are large compared to the cost of electricity and the small cross-subsidy amounts taken from non-subsidized residential consumption. Moreover, the vast majority of electrified households receive a net subsidy on their electricity consumption. About 87 percent of subsidy payments go to households living above the poverty line (ABL) instead of to the poor, and over half of subsidy payments go to the richest 40 percent of households. The key factor driving this outcome is tariff design. Only some states have highly concessional BPL tariffs. In most states, tariffs for the non-poor are subsidized nearly as much as BPL tariffs. Because non-poor households consume significantly more electricity than poor households, they are eligible for significantly higher subsidies. Owing to the relatively low access rate among poorer households, many of them are unable to take advantage of tariff subsidies.
Ethiopia’s model for delivering basic services appears to be succeeding and to confirm that services improve when service providers are more accountable to citizens. As discussed in the World Development Report 2004, accountability for delivering basic services can take an indirect, long route, in which citizens influence service providers through government, or a more direct, short route between service providers and citizens. When the long, indirect route of accountability is ineffective, service delivery can suffer, especially among poor or marginalized citizens who find it challenging to express their views to policymakers. In Ethiopia, the indirect route of accountability works well precisely because of decentralization. Service providers are strictly accountable to local governments for producing results, but in turn, the local authorities are held accountable by the regional and federal governments. A degree of local competition for power and influence helps to induce local authorities and service provides to remain open to feedback from citizens and take responsibility for results. The direct route of accountability has been reinforced by measures to strengthen financial transparency and accountability (educating citizens on local budgets and publicly providing information on budgets and service delivery goals), social accountability (improving citizens’ opportunities to provide feedback directly to local administrators and service providers), and impartial procedures to redress grievances. Woreda-level (district) spending has been a very effective strategy for Ethiopia to attain its Millennium Development Goals (MDGs). Woreda health and education goes to pay for health extension workers (HEWs) and teachers. This study finds evidence that woreda-level spending in health and education is effective. Owing to the intervention of HEWs, the use of health services has increased, especially among the poorest quintiles. Finally, the effect of woreda-level spending on agricultural extension workers is associated with higher yields for major crops. Spending on agricultural extension workers increases the probability that farmers, regardless of the size of their plots, will use improved farming techniques. Education, health, and agriculture account for 97 percent of woreda spending. This is complemented by support for capacity building and citizen voice. Clearly, spending efficiency is improved through better capacity, more transparency, and greater accountability to citizens.
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