FM blames lack of competition for power woes

Finance Minister Arun Jaitley said on Friday blamed the mess in the power sector on the lack of reforms in the state. Delivering the annual lecture of Competition Commission of India (CCI) here, Jaitley said the consumer has no option when it comes to the electricity provider - which has happened due to no competition.

"Not creating competition has led to this aberration the power sector. Today, we have a situation where we have more power than we need. We have a distribution network which is spread throughout the country. But, when it reaches the consumer, they have no option. This is the sector reform which is yet to take place," he said.
 

CCI Chairman D K Sikri also acknowledged that the body is facing a variety of challenges, including procedural and jurisdictional issues, he said the endeavour is to base its decisions on "sound economics" at the event.

He added that while The Electricity Act, 2003 - the central Act which envisages that the customer must have number of electricity providers to choose from - its implementation lies with the states. "2003 Act was a central law but power sector - particularly distribution, which is the real challenge of the sector - is entirely with the states. And the old mindset still continues to exist in a number of states or in most of them as they are unwilling to let go of the state distribution companies," he said.

Jaitley said that being pro-business without being pro-competition can create a dangerous situation like Russia - where the corporate sector is dominated by oligarchs.

"Being pro-business alone is not enough. Being pro-competition is essential to be pro-business. If you are pro-business without being pro-competition, the consequences can be very dangerous," he said. '

"Take the example of Russia, they went in for a lot of privatization, but because there was no competition, the entire privatization led to the creation of oligarchs. And oligarchs again meant monopoly," he added.