The Hindu Business Line : Power issues

There are significant pointers available to the policy-makers, both at the State and Central levels, in the phenomenal success of the Power Grid Corporation IPO. First and foremost, it is important to establish through policies, regulations and the administrative machinery, a viable business model. When established systems are unbundled or restructured, it is necessary to keep in mind the possible future options and decide on the policy frame-work.

The second important pointer is that of the organisational culture and capabilities of the public sector entity, to benefit from the enabling environment. PGCIL, through its employees, has established a bench-mark in performance, comparable to peers abroad.

The market is also rating the NTPC scrip (another major player in the power sector) with much expectation. NTPC has also benefited from similar policy initiatives and is a well managed organisation with committed employees. All this augurs well for the sector as a whole. The prevailing sentiment should be capitalised on to bring in part of the enormous funds required to make power for all by 2012 a reality.

Forward-looking State governments should be encouraged to corporatise packets of distribution networks, along with the transmission systems and approach the market for equity.

Every State, through the Electricity Act, has put in place a regulator that is guiding policy issues. In Tamil Nadu, for instance, the aggregate commercial losses on a grossed basis may seem marginally higher than what the market would like to see. But one can look at significant pockets (geographical areas) that can be spun off into separate companies and corporatised.

Tamil Nadu should take the lead in bringing in the much-needed funds to improve the network without relinquishing total government control.

V. Balakrishnan e-mail

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