GEB Reforms: A Note on Regulatory Strategy and an Approach to Privatisation

Briefly the proposal is for market competition in generation, through the development of a hybrid wholesale and retail (for bulk consumers alone) market. It is not a marker for all the electricity in the system, but largely a market that would allow distribution-cum-generation companies to purchase power from each other, and form pure generators; and would also allow bulk purchases and captive generators the choice of supply and customer. A market for generation, while allowing distribution companies the comfort of having some distribution assets, would lead to quicker development of the market and allow easier privatisation. The transmission assets of the GEB would need to be in a PSU with 50% shareholding by the state government and all other shares held by consumer interests including farmers’ cooperatives, households and industry associations and at least 25% of the stock disbursed through the stock market.