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istribution of the installed capacities –

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In the generation space, out of the overall capacity of 152 GW, the share of central and state utilities stands at 49.8 GW and 76.6 GW, respectively; and that of private sector stands at 25.8 GW. Even, of the 78.7 GW planned capacity additions during the 11th five-year-plan, central and state utilities together are estimated to add nearly 63.7 GW [5] . Similarly, transmission and distribution is also dominated by Power Grid Corporation and State Electricity Boards.

The conditions prevalent earlier and presence of high regulations, this sector was not favorable for the private players to enter into this sector. There were entry barriers, extensive licensing rules set up by the government which prevented private players in participating in the industry. Also, the cost of setting up a generation plant or a distribution network was quite high.

Also, due to the vital nature of power, Government had to cross subsidize the power between different consumer classes. This made the market inefficient and hence, a deterrent to the private players. However, during the recent times, there has been a trend reversal and the private players have made an entry into this sector. We have seen huge corporate houses like the ADAG Group, Birla Group foraying into this industry in India. We have also seen a few success stories with the private players in this setup. One such case will be discussed later in the paper.

KEY CHALLENGES AND DRIVERS FOR SUCCESS

The industry as a whole faces some challenges which need to be addressed before we see great improvements in this sector. The below table summarizes the challenges faced and some of the measures that could be adopted to overcome the challenges.

The issues that could creep up are given in the resulting issues column along with the key drivers for success.

How privatization would solve the problem of increasing generation capacity would be discussed in the next couple of sections. Fuel availability is a grave concern with the industry dependent on gas and coal. Some of the players already have bought coal mines outside India, but the demand-supply gap still exists. There have been some problems in this regards as well. The main international market for coal supply to India – Indonesia might change its regulations towards foreign countries. The planned targets from captive coal mines in India have also not been achieved. The only other option in this regard is to look at other forms of energy such as the nuclear energy. This however, has a long way to go before it becomes the main supplier of power in India. The plant equipment shortage also exists as the government projects are usually with the already burdened public sector units like BHEL which is struggling to complete projects on time. This has impacted in the capacity building plans of Government another reason why the government should move towards privatization. Setting up large generation, distribution units require land which is difficult to acquire due to bureaucracy and other government regulations.

With regards to manpower shortage, there is a general notion that talent shortage in the power and infrastructure sector is a long term problem and is likely to continue to push up project costs and risks. The flow of has been gradually reducing up as candidates have sought an al