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Efficiency evaluation of electricity distribution utilities in India: A two-stage DEA with bootstrap estimation

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  • Sudhir M. Bobde
  • Makoto Tanaka

Abstract

The efficiency of the energy sector in India, the world’s third-largest energy consumer, is becoming an important issue amid growing concerns about global warming. This paper examines the efficiency of electricity distribution utilities in India using panel data from 2005 to 2012. We perform a two-stage data envelopment analysis with a bootstrap estimation, in which bias-corrected efficiency estimates are calculated in the first stage and then regressed on external environmental variables in the second stage. First, we find positive effects of customer structure and population density on the efficiency of utilities. Second, we find efficiency advantages of public utilities in the Indian power distribution sector. However, the interaction between ownership and population density is negative, implying that public utilities are less efficient than private enterprises in high population density areas. Finally, we find that government subsidies are negatively related to the efficiency of utilities.

Suggested Citation

  • Sudhir M. Bobde & Makoto Tanaka, 2018. "Efficiency evaluation of electricity distribution utilities in India: A two-stage DEA with bootstrap estimation," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(9), pages 1423-1434, September.
    • Handle: RePEc:taf:tjorxx:v:69:y:2018:i:9:p:1423-1434
    DOI: 10.1080/01605682.2017.1398202
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    Cited by:

    1. Jamasb, Tooraj & Llorca, Manuel & Khetrapal, Pavan & Thakur, Tripta, 2021. "Institutions and performance of regulated firms: Evidence from electricity distribution in India," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 68-82.
    2. Ikram, Majid & Rafique, Muhammad Zahid & Mohammed, Kamel Si & Waheed, Rida & Ferraz, Diogo, 2023. "Efficient resource utilization of the electricity distribution sector using nonparametric data envelopment analysis and influential factors," Utilities Policy, Elsevier, vol. 82(C).
    3. Sarangi, Gopal K. & Pradhan, Abhilas Kumar & Taghizadeh-Hesary, Farhad, 2021. "Performance assessment of state-owned electricity distribution utilities in India," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 516-531.
    4. Patyal, Vishal Singh & Kumar, Ravi & Lamba, Kuldeep & Maheshwari, Sunil, 2023. "Performance evaluation of Indian electricity distribution companies: An integrated DEA-IRP-TOPSIS approach," Energy Economics, Elsevier, vol. 124(C).
    5. Vesterberg, Mattias & Zhou, Wenchao & Lundgren, Tommy, 2021. "Wind of change: Small-scale electricity production and distribution-grid efficiency in Sweden," Utilities Policy, Elsevier, vol. 69(C).
    6. Tooraj Jamasb & Manuel Llorca & Pavan Khetrapal & Tripta Thakur, 2018. "Institutions and Performance of Regulated Firms: Evidence from Electric Utilities in the Indian States," Working Papers EPRG 1809, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    7. Lee, Boon L. & Wilson, Clevo & Simshauser, Paul & Majiwa, Eucabeth, 2021. "Deregulation, efficiency and policy determination: An analysis of Australia's electricity distribution sector," Energy Economics, Elsevier, vol. 98(C).
    8. Ghosh, Santosh & Yadav, Vinod Kumar & Mukherjee, Vivekananda & Gupta, Shubham, 2021. "Three decades of Indian power-sector reform:A critical assessment," Utilities Policy, Elsevier, vol. 68(C).
    9. Nsabimana, René & Perelman, Sergio & Walheer, Barnabé & Mapapa, Mbangala, 2024. "Effectiveness and efficiency in access to reliable electricity: The case of East African countries," Socio-Economic Planning Sciences, Elsevier, vol. 93(C).
    10. Raúl Pérez-Reyes & Beatriz Tovar, 2021. "Peruvian Electrical Distribution Firms’ Efficiency Revisited: A Two-Stage Data Envelopment Analysis," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    11. Muller, Renan Bergonsi & Rego, Erik Eduardo, 2021. "Privatization of electricity distribution in Brazil: Long-term effects on service quality and financial indicators," Energy Policy, Elsevier, vol. 159(C).
    12. Zhou, Wei & Chen, Jin, 2021. "Is R&D helpful for China’s energy technology and engineering industry to respond to external uncertainties?," Energy, Elsevier, vol. 226(C).
    13. Srivastava, Govind & Kathuria, Vinish, 2020. "Impact of corporate governance norms on the performance of Indian utilities," Energy Policy, Elsevier, vol. 140(C).
    14. Yao, Xin & Huang, Ruting & Du, Kerui, 2019. "The impacts of market power on power grid efficiency: Evidence from China," China Economic Review, Elsevier, vol. 55(C), pages 99-110.
    15. Fanny Cabrera Barbecho & Juan Pablo Sarmiento, 2023. "Exploring Technical Efficiency in Water Supply Evidence from Ecuador: Do Region Location and Management Type Matter?," Sustainability, MDPI, vol. 15(8), pages 1-22, April.

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