Abstract:
Delays in project implementation and the attendant cost overruns
have been a regular feature in the electric power sector in Kerala. Almost
all the public projects, including the prestigious major hydroelectric
project of Idukki, have been the unfortunate victims of time and cost
overruns on account of a number of avoidable factors, labour disputes
being singled out as the prime villain. In this paper we take up a detailed
analysis of the cost of inefficiency involved in the time and cost overruns
in the power projects of the KSEB, and their possible causes. We find
that the arguments by the government in favour of private sector
participation in power generating capacity addition, under the pretext of
a severe resources crunch, is flimsy to the extent that the government is
actually over-spending on each of the projects undertaken. We find that
the real problem arises not out of a shrinking coffer but out of the
inefficiency of management coupled with the political economy of vicious
rent seeking.
