CASE STUDY ON MONOPOLY:- PERFORMANCE AND

FUNCTIONING OF STATE ELECTRICITY BOARD OF

INDIA.

Introduction:
Before we move to our topic, which is case study on performance and
functioning of the state electricity board of in India, we must know what the
monopoly in the real sense and type of advantageous it provide, so the
following is given the data which shows us all about monopoly.

MONOPOLY IS A WORD derived from two Greek word monos (alone or

single) and polein (to sell)) exists when a specific individual or an
enterprise has sufficient control over a particular product or service to
determine significantly the terms on which other individuals shall have
access to it.

ADVANTAGES OF BEING MONOPOLY:-

(1)Can set up its own price standards.

(2)Dominates the demands of the customers.

(3)Are able to be innovative with their product development.

Now moving to my topic ,I want to divide the performance and

functioning of electricity board of India in sub topics ,to have a better
understanding .

The Indian Electricity Sector:

Electricity sector is the most important source for india to

become super power in world as the whole development of
economic, social and environmental factors depend on the
availability of the energy and electricity is the most important
factor in doing so. In fact it has become essential ingredient for
improving the quality of life and its absence is usually associated
with poverty and poor quality of life. Though the Indian power
sector has achieved substantial growth during the post-
independence era, the sector has been ailing from serious
functional problems during the past few decades also. To
overcome the malfunctioning the state Electricity Board of India
come over with some of the strategies in 1993, to ensure its
loyalty among the customers , these strategies are given as
under:-

(1) It introduced privatization, i.e., it allowed the private

sector to ‘‘set up thermal projects, hydroelectric
projects, and wind/solar energy projects of any size’’.
Generators were invited to submit unsolicited proposals
to SEBs for the purpose;
(2) It also permitted the private institutions for power
distributions. it allowed the private sector to ‘‘supply and
distribute energy in a specified area, (even without
ownership of) a generating station’’;
(3) Foreign ownership up to 100% was allowed;
(4) The contract between the generator and the SEB was
for long-term power purchase agreement (PPA) offering
a guaranteed return on equity of 16%. Foreign investors
would receive exchange rate protection up to the
 benchmark return and for servicing the costs of foreign
debt
However these policies were not adopted later on as it was
considered that the privatization and globalization of such dealing
will lead to whither for the monopoly of SEBs. So in the same year
The National Development was the first official body to steer the
reform process.

(1) The industry should be given new mission and redressal to

be accountable to the consumers;
(2) Foremost reform needed in the state power sector is to
restore the autonomy of the state power utilities;
(3) The State Government must not interferein any of the
managerial operation of the SEBs to enable the latter to
have necessary technical, managerial and financial
autonomy;
(4) In the long run, the SEBs should function as corporate
bodies;
(5) Charges for the power supply should be increased increased
so that it is not less than 50% of the average cost of
generation i.e., cost per unit of electricity generated and
distribution of electricity during the year;

(6) Tomake valuable efforts/measures that are necessary for

the stoppage of unauthorized use and theft of electricity.

Role Of Government To Ensure The Monopoly Of

The State Electricity Board Of India
(1) National Electricity Policy and Tariff Policy:-the Govt. of India
came with much electricity policy about the electricity
production and charging new prices from the people for
the electricity used. These policies were to prepared for the
development of power systems based on optimal utilization of
resources such as coal, natural gas, nuclear substances, hydro and
renewable sources of energy.
 (2) National Policy on standalone systems for rural areas and non-
conventional energy systems:- The Central Government consulted the
State Governments to prepare and notify a national policy, permitting
standalone systems (including those based on renewable sources of
energy and other conventional sources of energy) for rural areas.
(3) National Policy on electrification and local distribution in rural
areas: For electrification of rural areas, bulk purchase of power and
management of local distribution in rural areas through Panchayats
Institution, user’s association, co-operative societies, non-governmental
organizations or franchisees, the Central Government in consultation
with State Governments and State Commissions formulated a national
policy
At the national level, the responsibility of planning rests with
Central Electric Authority (CEA) and the National Electricity Plan notified
by CEA shall form the basis for future capacity addition in generation and
transmission networks. The Act mandates that Regulatory Commissions
shall be guided by the National Electricity Policy, National Electricity
Plans and Tariff Policy in discharge of their functions. Further the
Regulatory Commissions are to be guided by any direction of the
government (Central Government for CERC and State Government for
SERC) pertaining to any policy involving public interest.

VARIOUS SOURCES USED BY STATE ELECTRICITY BOARD OF

INDIA TO DESPATCH ITS LIABILITIES /FUNCTIONS:
(*) Thermal Power: - Current installed capacity of Thermal Power (as
of 06/2010) is 104,424 MW which sums up to 63.7% of total installed
capacity. Maharashtra produces most of the thermal power in India.
(*)Hydro Power: -India is one of the leadin countries in stablishing
countries in establishing hydro electric plants. The installed capacity of
hydro power as on 2008 was approximately 36,877. The public sector has
an average share of 97% in this sector.
(*)Nuclear Power: - in current times there are seventeen nuclear reactors
functioning in India which approximately produce 4560 MW ,which consists
approximately 2.81%of total production. And
(*) Renewable Power: - Current installed base of Renewable
energy is 16,492.42 MW which is 10.12% of total installed base with the southern
state of Tamil Nadu contributing nearly a third of it (5008.26 MW), largely
through wind power.
DISTRIBUTION PROCESS OF SEBs FOR EFFICIENT AND EFFECTIVE
UTILISATION OF THE POWER GENERATED: -
The total production capacity in the country is over 148,700MW and the total number of
consumers is over 144 million. Apart from an extensive transmission system network at 500kV
HVDC, 400kV, 220kV, 132kV and 66kV which has developed to transmit the power from
generating station to the grid substations, a vast network of subtransmission in distribution
system has also come up for utilization of the power by the ultimate consumers.

Objectives
Its main objective is to increase its production capacity to achieve
the breakeven point so as to ensure the earning of profits in
the near future and also help in increasing the gross
domestic production at higher level.
(1) To ensure the availability of power supply at all the times
so that people begin to rely on electricity.
(2) It also aims to ensure the quality power supply i.e., by
increasing the voltage in the power supplied.
(3) Its other main objective is to lower down the operational
cost and increase the prices as to ensure the long run of
the business.
(4) Some other objectives is to ensure commercial viability
of the industry and to ensure power for all classes of the
society.

SUBSIDIES PROVIDED BY SEBs TO ERADICATE

THE HINDRANCE
Several state governments in India provide electricity
at subsidized rates or even free to some sections which
includes for the use in agriculture and for consumption by
backward classes. The subsidies are mainly as cross-
subsidization, with the other users such as industries and
private consumers paying the deficit caused by the subsidized
charges collected. Such measures have resulted in many of
the state electricity boards becoming financially weak. At
present (2009), the price per unit of electricity in India is
about Rs. 4 (8 US cents) for domestic consumers, and Rs. 9
for the commercial supply.