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Thursday, 13 June, 2002, 16:18 GMT 17:18 UK
Indian executives urge energy reforms
Shop worker reading by candlelight during a power cut in New Delhi, India
Power shortages are common in India
The Confederation of Indian Industries has called on central government to cut through bureaucracy that is holding up reform of the power sector.

The confederation wants reform accelerated, to increase the country's electricity generation capacity.

Improvements are also required to ensure the network of lines is good enough to allow excess power in one region to be sent to other areas where it is needed.

Power cuts or shortages from low voltage are so common in India that many companies have been forced to buy their own generators.

Inefficiencies

As India's economy has continued to expand, the demand for electricity has grown greater, but the various Indian states have failed to ensure that demand is met.

Enron logo
The Dabhol plant: Enron's most valuable asset in Asia

The existence of many different authorities regulating India's power sector has been blamed for the inefficiencies.

The delay in completing the Dabhol Power project in the state of Maharashtra has been held up as proof of the problems caused by state regulators.

Before the collapse of Enron - owners of the Dabhol plant - put the scheme in doubt, Maharashtra's electricity board had refused to buy power generated by the project in a dispute over charges.

Geography factor

V Raghu Rahman, the confederation's energy industry expert, told the BBC's World Business Report if the Dabhol plant had been operational the current electricity supply problems would have been manageable.

He said today's crisis in Maharashtra stemmed from the separation of the state's power generating capacity, located in the east, from the consumption centre (and the Dabhol plant) in the west.

The network was not capable of sending the power between the two regions, he added.

The Dabhol plant is in the west of the country, 250 km south of Bombay.

"Goldmine"

The Dabhol plant is currently in the hands of receivers while a buyer is sought.

"Whoever is going to buy it is going to hit a goldmine," Mr Rahman said.

The slow pace of reform of India's energy sector has deterred foreign investors.

At the end of last year, American energy giant Mirant pulled out of a $5bn power project which was originally planned to be the largest coal-fired complex in the world and the largest power plant in India.

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V Raghu Rahman, CII energy industry expert
"Within three or four months there will be a buyer [for the Dabhol power plant]"
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13 Dec 01 | Business
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