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Technical Efficiency of Thermal Power Generation in India: Post-Restructuring Experience

Author

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  • Sahba Fatima

    (Discipline of Economics, School of Social Sciences, Indira Gandhi National Open University, New Delhi, India)

  • Kaustuva Barik

    (Discipline of Economics, School of Social Sciences, Indira Gandhi National Open University, New Delhi, India)

Abstract

The Indian power generation industry has undergone a paradigm shift during the past two decades largely due to private sector participation and restructuring of the sector. In order to assess the performance of the power generation sector, the present study takes annual data of 14 major states in India for the period 2000-01 to 2007-08 and estimates a stochastic translog production frontier. The decline in technical efficiency of the Indian power generation sector over the study period, as obtained from the econometric estimation, appears to indicate that it has failed to bring in the desired results in terms of efficiency improvement. The total factor productivity (TFP) of the power generation industry, which includes technical change, technical efficiency change, and scale change, however, has shown some improvement. Technical efficiency of the power generation industry is explained by technical manpower employed, per capita state domestic product, year of unbundling of State Electricity Boards (SEBs) and time variable. The study concludes that inefficiency in Indian power sector is caused by the above mentioned factors rather than stochastic error.

Suggested Citation

  • Sahba Fatima & Kaustuva Barik, 2012. "Technical Efficiency of Thermal Power Generation in India: Post-Restructuring Experience," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 210-224.
    • Handle: RePEc:eco:journ2:2012-04-2
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    References listed on IDEAS

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    Cited by:

    1. Sahba Fatima, 2016. "Performance Evaluation of Thermal Power Generation: Non-Parametric Frontier Approach," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 4(1), pages 81-92, March.
    2. Eric L. Prentis, 2014. "U.S. Electrical System Reliability: Deregulated Retail Choice States Evidence and Market Modeling," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 588-598.
    3. Yeongjun Yeo & Dongnyok Shim & Jeong-Dong Lee & Jörn Altmann, 2015. "Driving Forces of CO 2 Emissions in Emerging Countries: LMDI Decomposition Analysis on China and India’s Residential Sector," Sustainability, MDPI, vol. 7(12), pages 1-22, December.
    4. Grace Njeru & John Gathiaka & Peter Kimuyu, 2020. "Technical Efficiency of Thermal Electricity Generators in Kenya," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 340-347.

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    More about this item

    Keywords

    Stochastic Frontier Analysis; Power Sector Reforms; Total Factor Productivity; India;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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