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So what did the Government of Gujarat (GoG) do?
They encouraged private sector participation (PSP). But that was not easy. Because of two reasons.
Firstly, the investment was heavy and the revenues out of that huge investment was minimal. Secondly, the GoG was in a very bad situation. They were working out a broken down power system which was supported by a broken down group of human resources. They were unable to spend on other areas, especially human resources.
So the objectives were reset:
Addressing the concerns of the investors
Creating a business environment conducive to improving the sector’s operational efficiency, financial viability, and service to consumers.
They intended to achieve this objective by the following means:
Greater competition at all levels of the sector wherever practicable.
Corporatization and commercialization of existing sector entities.
PSP in the generation and distribution segments.
Tariff reform to cover costs and profits
An independent regulator
Transparent, reasonable, direct and quantified subsidies to vulnerable sections of consumers.
On paper, these may look easy. In real world, these objectives and modus operandi were ridiculed. Still, the goals were achieved.
The GoG passed a reform act on 2003. The Gujarat Electricity Industry (Reorganization and Regulation) Act in 2003 was passed by the GoG to enable the establishment of Electricity Regulatory Commission (ERC) and to reorganize the structure of the GEB. This paved way for the organized reorganization that happened in the GEB and the entire industry.
What was new in the Act? Next post. I promise that it will be a long one.