India’s electricity sector faces a crisis
India’s commercial and residential electricity sector is facing a crisis, with the government set to privatise a number of electricity utilities, according to a report by a leading energy think-tank.
Key points:The government wants to privatize eight utilities, including two that were privatised by the previous administrationThe report says the utilities were in trouble due to poor management and poor operational performanceThe report said privatisation would mean higher prices and the loss of thousands of jobsThe report by the National Centre for Policy Research, said the privatisation of these utilities would mean an increase in electricity prices of as much as 50 per cent.
The move would also see the loss in jobs of thousands.
The National Centre said the privatization would mean a “massive job loss” and the government would be forced to “reorganise the electricity system” as it did not have the resources to do so.
“This will cause huge economic disruption and it will cause major disruptions in the power sector,” the report said.
“It will also bring massive cost and disruption to rural households.”
The report added that the government had failed to take adequate steps to ensure that the utilities’ management was “efficient, efficient and sustainable”.
The move was seen as a major victory for opposition parties and some civil society groups, who have been pushing for a better governance and improved management of the privatised utilities.
The government has said the move would save the country $4 billion in electricity tariffs.
The government said the eight utilities had been in trouble since the former government in 2015 privatised six utilities.
India is one of the largest polluters in the world and has been accused of running an aggressive power sector, with power tariffs soaring and the country’s population suffering.