The government needs to take strong measures to help the debt-ridden distribution companies, whose miseries are being compounded by low tariffs and reluctance of banks to finance - given their perception of the sector as unviable.
The government needs to take strong measures to help the debt-ridden distribution companies, whose miseries are being compounded by low tariffs and reluctance of banks to finance - given their perception of the sector as unviable.Tariffs are expected to rise once the Central Electricity Regulatory Commission (CERC) approves a hike in the unit price of electricity sold to customers. Many power utilities, including NTPC -- the country’s largest power generating company -- have been demanding an increase in power tariffs amidst rising input costs. However, the impending General Elections in 2014 may prove an obstacle to CERC’s move.
There are few states where tariff has been unchanged for the last 4-5 years (unchanged for the last seven years in Tamil Nadu and four years in Rajasthan), whereas loss-reduction demands a 25-30% revision annually. However, some states have been increasing the tariff regularly (such as Maharashtra). In the year so far, 12 states have increased tariffs in the range of 9-34% to ease the burden of distribution companies. Rajasthan, Tamil Nadu, Madhya Pradesh, Uttar Pradesh and Bihar account for 70.6% of the power distribution losses in the country.
India’s state electricity distribution companies (discoms) reported an aggregate loss of around INR 40,000 crore in the year ended March 2010, which is as high as the government’s annual divestment target. The losses are estimated to cross INR 1.16 lakh crore by 2014.
Against this backdrop, SNP Infra Research is launching a report titled “Power Tariffs in India (2011-12). The report will provide an insight into the latest tariffs (2011-12) applicable in each of the states in comparison with 2010-11. It will also capture the percentage change in tariffs.