(Any opinions expressed here are those of the author and not of Thomson Reuters)
India has raised gas prices and also made it easier for power companies to pass on the rising costs of imported coal to customers – two policy steps aimed at boosting fuel supplies and helping to minimize the country’s chronic power shortages.
However, the reforms are unlikely to be a quick fix for India’s blackouts. It may take at least two years for the gas price rise to boost fuel supplies as investments in output and import facilities bear fruit, but even then the key to the plan may lie with distribution companies.
The state-owned distributors – known as discoms – will have to find money to buy the more expensive electricity from power stations. But passing on too much of the costs to consumers will be politically unpopular and the discoms may opt instead to simply halt supply.
Reuters spoke to Vinayak Chatterjee, the head of Feedback Infra consultants about the reforms.
Chatterjee said the coal policy change was an imperfect solution but better than nothing.