Strategy

Strategies can be broken down to the following categories:

1. Power Generation Strategy.
2. Power transmission Strategy.
3. Distribution and supply Strategy.
4. Regulation Strategy.
5. Financing Strategy.
6. Conservation Strategy.
7. Communication strategy.
8. Legislative Initiatives.

(1) Power Generation Strategy: The Power Generation Strategy aims at

production of Power at optimum cost. Low-cost generation would enable
appropriate economic growth in a competitive environment. Selections of
Technology, plant construction techniques and operation practices have all to
evolve around this basic consideration.
The strategy focuses on the following six major areas:
(i) Optimum utilisation of Capacity
(ii) Control of input cost
(iii) Better Fuel Mix.
(iv) Hydro Proportion Improvement.
(v) Non-conventional Energy Sources of Power Generation.
(vi) Technology Up gradation.

(2) Transmission strategy: The transmission strategy aims at;

(i) Creating a transmission system for proper evacuation of
generation capacities being planned
(ii) Balanced interregional transfers of Power so that the
capacity of generation assets is fully utilised; and
(iii)Greater reliability through strengthening of the network.
(3) Distribution strategy: Of the three main segments of the power industry,
namely, Generation, Transmission and Distribution, the distribution segment
has suffered the most, both technically and financially.

Distribution reform initiatives, which have been taken during the last 2 years
aim at:
i. System up gradation
ii. Technical Loss reduction
iii. Control on theft of electricity
iv. Consumer friendly orientation
v. Establishing commercial viability of the distribution business
vi. Decentralised distributed generation and supply for rural areas.
vii. Introducing competition for improved customer service and
satisfaction
viii. Information technology to replace human interface to the extent
possible.

(4) Regulation strategy: Large capacity additions in the last 25 years and a larger
amount of electricity supply, particularly in the last 10 years, have seen this
sector faced with a serious financial crisis. Annual losses of over Rs. 300
billion, and likely to go up if not immediately arrested, have made the
distribution and supply business, etc. unviable and unsustainable. Also,
because of the financial bankruptcy in the sector, essential consumer
services in many utilities have been adversely affected. Regulatory strategy,
therefore, aims at bringing about commercial viability in the sector on the
one hand and ensuring consumer services, quality of supply and satisfaction
of consumers on the other.

(5) Financing Strategy: Over 100,000 MW of capacity addition and development

of commensurate transmission system and distribution infrastructure call for
huge financial investments. The salient features are as follows:
 i. Performing CPSU’s would be asked to organise, on their own,
both their equity and debt requirements from internal resources and
from the market.
ii. During the Tenth Five Year Plan, the capital outlay of the CPSU’s
is being increased by over 250 %
iii. All CPSU’s that have, over a period of time, matured and have
very strong financial fundamentals may, in addition to accessing the
debt markets, also access the equity market. First domestically and
subsequently, internationally.
iv. Based on the requirement, strategies that have been put in
place, resulting in improved bankability of projects external assistance
from international funding organisations like the World Bank, ADB,
JBIC, etc. would be sought to meet part of the requirement.

v. As opposed to seeking foolproof payment comfort mechanisms

like government guarantees, escrow, etc., investors and lenders will
need to be persuaded and convinced to consider financing, maybe on
a selected basis, keeping in view the intensity of reform initiatives and
progress of concrete actions taken.
vi. Major business groups are being approached to consider the
long term demand projections and stability of the power market and,
therefore, consider investing significantly in this sector.

(6) Conservation Strategy: According to an estimate, almost 25,000 MW of the

additional capacity needed can be saved, if different groups of consumers-
agriculture, domestic, commercial and industry- were to optimally use power
and adopt and implement energy conservation measures.

The conservation strategy therefore aims at:

i. Considerable thrust on demand side management.
ii. Utilities to be asked to evolve and seriously implement
appropriate load management practices.
 iii. Organise programmes for technology up gradation at the level
of manufacturing of equipment, gadgets and appliances to design and
manufacture energy efficient systems and appliances.

(7) Legislative Initiatives: Considering the potential of saving energy, a

comprehensive Energy Conservation Act was legislated by the Government of
India in 2003. The Electricity Bill, 2003 is a historic legislative initiative, which
integrates all the electricity legislations and provides for an electricity market
that will ultimately create competition, reduce the requirement for
permissions and sanctions,
Provide for sustainable growth of the sector and, above all, ensure quality,
reliable and competitively priced power to consumers.

(8) Communication Strategy:

(a) Political consensus: Electricity being a concurrent subject, and
distribution management being under the sole jurisdiction of the state
governments, it is imperative that political consensus is secured to
effectively handle challenging issues such as control of theft of electricity,
free supply of electricity to agriculture, highly subsidised supply to the
domestic sector and improvement of the work culture in the utilities.
Unless all the political parties commit to a coordinated plan of action to
free this sector from these problems, reform initiatives would not yield the
desired results.
(b) Public awareness: Theft of electricity has become a social evil. Non –
payment of electricity bills should emerge as a stigma. Drawal of
unauthorised electricity should be treated as a crime. Since in many cases
consumers are not paying for the power they consume, the wasteful use
of electricity needs to be controlled. Conservation of electricity has to
become a way of life.
(C) Media Support: Concrete results from reform initiatives would require
a tremendous amount of media intervention and positive support.
Consumers at large will need to unlearn a number of habits acquired over
several decades. Employees engaged in utilities will need to reorient their
method of working to becoming consumer friendly. They
will have to think that their survival and growth is dependant on the
commercial survival of the sector they serve. If these changes have to be
brought about in the mindset of people – consumers, employees, the
political system the administrative set – up and people at large - well –
orchestrated and suitably demonstrated media inputs would be
imperative. Definite actions have been initiated on this front.