Empirical Estimation of Technical and Scale Efficiency in Indian City Gas Distribution (CGD) Entities Using DEA

This paper empirically examined the technical and scale efficiency of 14 entities of Indian city gas distribution (CGD) entities using the data development analysis. The efficiency score thus obtained was used for ranking the entities. This study also discovered, on an average, that the entities which had legacy and well entrenched infrastructure performed more efficiently than newer entities. This study also pointed out that most of the firms, which were new entrants and small in size, were operating under increasing return to scale. Currently, the Indian regulatory authorities follow the traditional approach of rate of return method for the promotion of CGD entities and benchmarking of these utilities through efficient measurement. The present study shall help regulators to monitor their performance for reducing the information asymmetry between the regulator and regulated companies.