Power shortage is major concern in India

Mar 25, 1997 01:00 AM

Mar. 4, 1997 The Indian government is considering privatising its state electricity boards in a radical bid to solve the country's power crisis.A newspaper said recently a government-appointed body had proposed states sell off most of their grids, retaining only a minority holding, to increase efficiency. The proposal by the committee, set up to examine an overhaul of the power sector, was one of six schemes being considered, it said.It added other ideas included splitting state electricity boards into separate companies to oversee power generation and distribution. Private firms could also be allowed into either sector.
The recommendations come after Manishi Roy, a director of the Confederation of Indian Industry trade forum, said the power industry needed an additional investment of at least $ 200 bn in the next 5 years. She said power problems meant Indian firms were forced to run back-up generators, thus adding to their costs and losing in competitiveness.
Many of India's electricity boards are in dire financial trouble, with only one of the 25 making a profit, according to government figures. Electricity cuts are a daily occurrence as demand outstrips supply.
A government report on India's economic performance in the year to March 1997, published just before last week's budget, said power generation had only grown 3.4 % between April and November last year. It added: "The slowing in the industrial production is clearly attributable to the dramatic fall in the rate of growth of electricity production and the slowing of growth in the mining sector due to a 10 % decline in crude oil output.
"The recurring power failures underline the critical nature of the power problem throughout the country." Finance Minister Palaniappan Chidambaram said during his budget speech on February 28 that the poor power sector performance was a "great concern."

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