Tag Archive: Gujarat power story

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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. Smile


Disclaimer – The opinion’s are mine. Statistics aren’t mine. They have been picked up from the internet and research work from various sources (links provided as and when). My political orientation, at present, is neutral. I have a growing discontent towards the congress government at the centre. However, that thought will only reflect on the initial lines of this post. Further down, I am going to speak only about the power reforms that happened in Gujarat. This is not propaganda. This story inspired me and I am sharing it. Period.

2012. Congress rules the country without a long-term vision. Congress does not have a solid development plan for the nation. The situation looks grim with inflation soaring high and money value falling low. The liberalization of trade or the so called trade reforms by Manmohan Singh have made the Indian manufacturers/farmers/companies to struggle against huge conglomerates that have international experience in trade. Manmohan keeps himself silent and the only time when he breaks his silence, he says – my silence is better than a thousand answers. You cannot get an justification for that statement from the Prime minister because it would take another 10 years to get that.

Meanwhile, a man called Narendra Damodardas Modi, Chief minister of Gujarat, gave an interview to Wall street journal on his state and development. Though Modi was not very methodical in answering few questions, he was very open in few. I don’t support Modi very blindly. I know he is a man with an accusation that holds him responsible for the 2002 Gujarat riots. However, a person who opens his mouth to say something is more a visionary than a man, who prefers to maintain silence, when he is answerable and accountable to 100 crore people.

Here are few excerpts from Modi’s interview to WSJ. They have been translated from Hindi.

WSJ: What was your reaction to India’s massive electricity blackouts at the end of July?

Modi:  The power and energy sectors are the biggest constituents of the infrastructure sector. If you ignore them, no development will happen. As far as the power blackout is concerned, I am embarrassed by it. This is a great loss for my nation. The situation was immediately compared to Gujarat. The world saw so much darkness that even a flicker of light caught their attention.

WSJ: Can Gujarat’s electricity reforms be a model for other states?

Modi: Villages (in Gujarat) didn’t used to get power at dinner time. They’d eat in the dark. Kids didn’t have light to study for exams; if mother was sick, there was no electricity…It disturbed me. Then I got involved. God helped me. He gave me a technical solution: separating the network so there are different power lines for agriculture and for domestic use. It became a huge success story – we completed it in 1,000 days.  All the states of India felt that this should be replicated in their states too.

WSJ: Should India remove foreign investment barriers in the multi-brand retail sector, allowing in companies like WalMart and Tesco? Would you support such a move?

Modi: When you bring in multi-brand retail items into the country, you’re not just bringing the products, but you’re also harming local manufacturers. You must strengthen your manufacturing sector and put it on a level playing field with the world. Any kind of items manufactured globally, like small pens, pencils, notebooks – our manufactured goods need to be on a level playing field. Then let them come. Have a competition. The biggest loss is going to be to manufacturers. Local traders will be fine; they will sell the stuff imported from outside and still earn profits.

I feel these answers, however politically oriented they may be, still prove that Modi is trying to do something to this nation. For the people, who question the radical Hindu-istic policy of Modi, that is a different topic and we will discuss it another post. For now, I am going to speak only about the power situation in Gujarat – Pre-Modi and Post-Modi.

2001 – The year, Modi became the chief minister of Gujarat. The next year, Gujarat was ravaged by communal riots that killed anywhere between 1000-2000 people. Gujarat was no better in developmental scenario too. In 2001, the power situation in Gujarat was very bad. Mr.Tarak Das from Indian Institute of Planning and Management (IIPM-Ahmedabad) did a study on Gujarat Power scenario titled “Case study on – Gujarat State Electricity Board (GSEB) – A benchmark in the progress of SEB reforms.” IIPM’s authenticity may be questioned (we will do a separate post on this one)because they are an controversial organization but the figures and other research studies speak for the change. For an organization that reported an overall loss of INR 2542.98 crore in 2001 and to report a profit of INR 200 crore in 2006, something should have happened between 2001-2006. The something were the reforms suggested and implemented by N.D.Modi’s government.

To go into more details, GSEB was a failing organization in 2001. They had heavy losses (INR 2543 crore), their transmission and distribution (T&D) losses were high (35.2%) and the power purchase cost per unit from private players was high (INR 2.59). GSEB had no funds and was reeling in debt with interests alone summing up to a staggering INR 1227 crore (included in the loss). How would you revive the organization? The Gujarat government did it with aplomb. The story is interesting.

Its too late for the day. I will continue the story in subsequent posts. Good night. I dream big and I dream good. Do the same. They become true one day.

p.s – traveling over the weekend. The next post may be delayed by 3-4 days. Have a nice weekend.



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