Politics, Procurement, Bail-Out and Buy-In: Woes and Ways of Rajasthan’s Distribution Sector

By Siddharth Sareen
Regulatory Assistance Project
30 April 2017

What are the recent consequential developments and current issues in Rajasthan’s electricity distribution sector, bailed out of more than $10 billion debt by the state government in 2015? If political interference got it there despite sectoral reforms and unbundling in 2001, what measures have been instituted to safeguard against a repeat? As Rajasthan’s distribution companies turn to technology adoption, efficiency enhancement, and loss reduction measures, this study offers an in-depth analysis of the sector’s stakeholders and practices, capturing contrasting perspectives. Based on 30 expert interviews, in addition to secondary research, it examines the political economy of distribution in Rajasthan, spanning concerns of various consumer categories and providing insights into the roles played by a number of institutions, from the regulatory commission to the renewable energy nodal agency. The article lays out key actors’ expectations with regard to current developments on tariffs, renewable energy growth targets and compliance, the advent of competition and a franchisee model introducing private players in distribution, popular engagement, and demand-side management. Unpacking the current issues that characterise this sector, it argues that the prime state-level concerns are: the continuation of an organisational culture that led to heavy indebtedness despite recurrent attempts to bolster efficiency; continuing political influence rather than the autonomous functioning of discoms; the beginnings of a dual-track sector with private franchisees operating in urban areas; and an adverse configuration of incentives to ensure renewable energy growth.