Regulating state-owned enterprises in the infrastructure sector: The experience with electricity in India

Most of the infrastructure services in India are government-owned and supervised. In order to attract private investment to other sectors, the government introduced the institution of independent regulation into electricity and is considering doing so in such sectors as coal, and oil and gas. Electricity regulators have been in place at the Centre and the states for periods varying from two to six years and have been given powers to regulate tariffs, transmission, and certain private investments. They are enjoined to promote competition, efficiency, and economy in the sector, encourage private investment, and safeguard consumer interest. They have the contradictory objectives of making the sector financially viable in order to attract investment, and yet improve the availability, accessibility, and affordability of electricity. They have to perform their functions through government-owned enterprises. This has posed difficulties in terms of inadequate and inaccurate technical and financial information, governments supporting the utilities in bypassing the regulators, defiance of regulatory orders, non-compliance, and frequent challenges in courts. Regulators and their staff tend to be people drawn from government service precluding fresh thinking or independence from government practices. While the courts have on the whole been supportive of the regulatory orders, decisions have taken time and caused delays in the implementation of much-needed changes.