The WB reforms in the power sector were clearly focused on increasing investments and moving towards financial viability, through a private sector led model, tempered with competition. This market oriented approach did not yield the expected outcomes. Even financial viability was not achieved for most utilities. It has been seen that mere changes in the ownership of utility will not empower the consumers or public to effectively challenge the powerful members of the alliances controlling the sector. Thus, there is no way that the stranglehold of these on the power sector will be released after privatisation. In fact, there is danger that, with entry of the new powerful actors, the new and equally (if not more) powerful alliances of business interests, politicians and bureaucrats might take over the control of governance of the sector. The situation after entry of the Enron and other IPPs has demonstrated that this apprehension is not ill founded. Thus, the solution of privatisation does not effectively address the core malady haunting the sector, viz., the governance crisis manifested in the form of control of some alliances over governance of the power sector.
In any case, privatisation did not take off as suggested by WB. Delhi has been the only other distribution sector to get privatised (2002), that too through a process independent of the WB. WB model did not succeed in creating sustainable democratic institutions and it neglected the equity and environmental sustainability dimensions. The reforms were not crafted for benefiting the poor (poor were not at the centre stage of reforms). The poor were supposed to benefit through increased investment (and improved services) after the financial viability of the sector improved. This it self is a big limitation as the Bank portrays "poor" as its main focus.
Key observations based on the decade long WB crafted Power sector reforms are:
1. Incomplete sector analysis: WB often follows a one track mind, ignoring issues which do not suit its logical framework. With enormous international database at its disposal, it did not analyse why IPP power was costly when price of Combined Cycle Gas Turbine (CCGT, on which most IPPs are based) was falling . WB did not promote Integrated Resource Planning towards rationalising generation capacity addition plans and promoting demand side management. While promoting privatisation, no efforts were made to analyse the decades of Indian experiences in private distribution .
2. Ignoring situational requirements: WB polices and projects are based on its global approach to social issues. Sufficient emphasis is not given to the local nuances. For example, strengthening the State owned Electricity Boards towards improving the sector did not figure in WB agenda until recently. Perhaps after privatisation failed to deliver, the WB Country Strategy and other documents mention about the need to strengthen public institutions and say that, the 'one-size-fits-all' policy of privatisation and liberalisation of electricity industries is not the perfect solution as it was claimed to be.
3. Positional bias: WB has been vocal when governments have taken stands which align with its own approach. Promoting IPP projects, SEB unbundling, cross subsidy reduction and distribution privatisation are examples. But it has been loudly silent when governments have taken anti public interest actions like unfair IPP contracts.
World Bank portrays itself and is widely perceived as a Knowledge Bank. Its outputs are read widely by bureaucrats and most mainstream actors. They are considered as 'state of the art', authentic and having rigour. Analysis of the power sector reform belies this image.
