States power sector losses on the rise - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

States power sector losses on the rise

Mar 3, 2000

In a presentation by ICICI to the power ministry, the power sector of all states put together have reported operating losses of Rs 123 bn in FY99, and this is expected to go upto Rs 1,700 bn by FY2012. It states that further delays in carrying out power reforms will lead to higher cost escalations in the power sector in future. The power dues from the states to central power supplying units is expected to go up from the present level of Rs 230 bn to Rs 1,500 bn by 2005. As there will be marginal capacity additions in the state sector, the share of the state sector will fall from 59% currently to 40% by 2012.

Independent Power Producers (IPPs) have not taken off as yet as they are dependant on State Electricity Boards (SEBs) who have poor financial strength. Of the total projects awarded to the private sector with a total capacity of 75,000 MW so far the private promoters are able to tie-up for only 18,000 MW. The overall power shortfall is expected to go upto 46,000 MW in 2012.

Hence it is important to speed up the power sector reforms by unbundling of state electricity boards by dividing the functions of generation, distribution and transmission into different entities. The states who have taken this seriously are Orissa with its newly formed distribution companies and Uttar Pradesh State Electricity Board (UPSEB) who has succeeded in trifurcating the functions into three separate entities inspite of a strike by workers and political pressures. The other state governments who also plan to unbundle their SEBs are Maharashtra and Gujarat. The remaining other states however need to be encouraged to do the same.

The government needs to speed up power sector reforms by giving sops to the transmission and distribution sector by granting them infrastructure status, encouraging both foreign and domestic players in the private sector and rationalising the fuel duty structure for power companies. As transmission and distribution losses currently stand at 21% for SEBs, it is necessary to bring them down to international levels by encouraging private players in this segment.

The transmission and distribution losses and under-utilisation of capacity has resulted in high cost of power to the consumers and industrial sector. This in turn increases the cost of production of the Indian industrial sector vis--vis the international market.

Equitymaster requests your view! Post a comment on "States power sector losses on the rise". Click here!

  

More Views on News

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

Will the Revival Plan of JSW Energy's Renewable Business Boost its Presence in India? (Views On News)

Nov 26, 2021

How will this move help the company in building and streamlining its renewables portfolio.

The Reason Behind the Thrilling Performance of IEX in the Last few Sessions (Views On News)

Oct 22, 2021

IEX share price has been on a roll recently. The company's shares surged over 165% in the last six months.

There's a New Kid on the Green Hydrogen Block (Views On News)

Nov 17, 2021

Billionaire Gautam Adani has announced plans to invest up to US$70 bn in renewable energy and produce the cheapest hydrogen in the world.

Solar's Hot in India. It's About to Get Hotter... (Views On News)

Nov 1, 2021

Will this company help India to become the largest player in solar space?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE POWER


Dec 3, 2021 (Close)

S&P BSE POWER 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS