State governments were reluctant and Left parties were opposed to unbundling of electricity boards, but a government-appointed study has concluded that restructuring has improved the performance of these utilities.
"On the whole, in majority of the states, there are considerable improvements in performance of the utilities after restructuring. The broad conclusion is that despite some shortcomings, the overall impact of restructuring has been positive and in the right direction," the Indian Institute of Public Administration said in a report.
The Delhi-based institute was mandated by the Union power ministry last year to study the impact of unbundling of state electricity boards. It examined 12 states, including Orissa, Haryana, Gujarat, Maharashtra, Andhra Pradesh and Karnataka.
Under the Electricity Act, 2003, states were expected to divide their electricity boards into uni-functional utilities for generation, transmission and distribution by June 2004.
The measure was aimed at pushing reforms, improve performance and attract private participation in state utilities that posted a staggering loss of Rs 26,150 crore (Rs 261.5 billion) in 2006-07, according to the Economic Survey.
However, the United Progressive Alliance government shortly after assuming charge gave extension to more than a dozen states for restructuring SEBs. In fact, repeated extensions were given to many states amid reluctance by state governments, protests from Left parties and opposition from employees of these utilities.
States, including Tamil Nadu, Kerala, Chhattisgarh, Bihar, Punjab and Himachal Pradesh, are yet to unbundle their SEBs.
IIPA also noticed reduction in losses, higher investments and capacity additions, improvement in efficiency, customer care, billing and metering and greater accountability in states where SEBs have been reorganised.