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Centre-city rifts impede Delhi energy reform

Wednesday, February 25, 2015

Subject

Outlook for the new Delhi government's energy policy.

Significance

The Aam Aadmi Party (AAP), which swept Delhi elections this month, faces pressure to deliver its key promises. It pledged to halve electricity bills for consumers using up to 200 units electricity per month, create retail competition among distribution companies (discoms) and transform Delhi into a 'solar city'. This is a tall order given that Delhi is unlikely to gain full statehood and therefore requires central government support to deliver.

Impacts

  • Infrastructure upgrades necessary for fostering retail competition in electricity distribution promise investment opportunities.
  • Delhi's environmental pollution will elicit close scrutiny from the centre; this may be the upside of political competition.
  • The AAP is likely to subsidise electricity to pacify voters, at least in the near term.
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