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Lesson
Overreliance on the private sector for power generation investments when there are structural issues in the distribution sector that may not result in desired outcomes. Financial viability and cost recovery in the sector are important considerations for private sector investments in power generation in the absence of opportunities to sell electricity outside the state.

Project Number: 29473-013, 29473-023
Project Name: Madhya Pradesh Power Sector Development Program [Loans 1868/1869]
Report Date:
Lesson
Restoring financial viability of the power sector in Madhya Pradesh requires a holistic approach encompassing technical, institutional, and governance measures. The Madhya Pradesh power sector has been suffering from structural problems such as persistently high level of ATC losses, increasing cost of generation and power purchase, and limited scope of tariff increase as industrial tariffs have already reached the cost of captive power generation.

Project Number: 29473-013, 29473-023
Project Name: Madhya Pradesh Power Sector Development Program [Loans 1868/1869]
Report Date:
Lesson
Regulatory and institutional reforms alone are important, but they will not result in improved performance in the absence of accountability and incentives. The SDP was based on the premise that regulatory and institutional reforms will improve the performance of sector entities. Although the regulatory and institutional reforms were implemented as intended, the sector entities except for MPTransco showed no significant improvement in performance.

Project Number: 29473-013, 29473-023
Project Name: Madhya Pradesh Power Sector Development Program [Loans 1868/1869]
Report Date: