According to a paper presented at the Ficci seminar on "Restructuring of PSUs", Arthur Andersen pointed out that in the first phase, the government should establish an appropriate legal and regulatory framework and unbundle the state electricity boards (SEBs) into generation, transmission and distribution setups.

The second phase of the reform, the report adds, should focus on corporatisation, commercialisation and institutional strengthening of the entities, privatisation of part of the distribution entities, partial restoration of credit worthiness of the sector and improvement in system efficiency.

Thereafter, the study suggested, the government should complete privatisation of distribution business. This has to be accompanied by introduction of private investment togeneration through competitive solicitation for individual power producers and consolidation of the functioning and financial performance of the new power utilities.

In the last phase, the report stressed efforts should be made to achieve higher customer satisfaction through reduction of power deficit, attainment of higher quality and efficiency in electricity services through increased competition and private participation.

Pointing out that the reform process has commenced in Orissa, Andhra Pradesh and Haryana and proposed to be taken up in Rajasthan, Madhya Pradesh and Gujarat, the report stated that, "the success of restructuring process in these SEBs hinges on skill building and institutional strengthening of the new entities."

This would involve changes in the corporate culture of new entities to provide employees with greater autonomy and accountability leading to increased staff efficiency and productivity. The reform programme should also ensure a continuation and improvement in the existingworking conditions and welfare benefits of the employees.

The objective of institutional strengthening programme should be to develop a more commercial and customer focussed management structure to prompt speedier decision making and establishing accountability. The other objective should be to develop performance based systems and service conditions that would support the attainment of corporate objectives and motivate and reward employees for better performance. This has to be in addition to the efforts for enhancing skills of employees and achieve higher productivity. According to Arthur Andersen, the key areas to be addressed in the reform programme for power sector should include management structures, human resource systems, employee capacity building (training), scheme for transfer of assets, liabilities and personnel and employee communication.The reform strategy suggested by Andersen is aimed at addressing some of the glaring problems of the power sector in the country.