SEBs: Will they ever see black? - Views on News from Equitymaster

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

  • MyStocks


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

SEBs: Will they ever see black?

May 26, 2000

The financial health of the State Electricity Boards (SEBs) has always defined the pace of the power sector reforms. Guarantees, counter-guarantees, escrows and securitisation are all the offshoots of the poor financial position of the SEBs. Everybody agrees that SEBs have always had to operate with the dice loaded against them. The government subsidised power tariffs for agriculture, which virtually meant that they were in loss from day one. No profits meant no development of infrastructure, no improvement in plant load factors (PLFs).

No development in infrastructure meant high transmission and distribution (T&D) losses. Compared to world average of around 12-15% in T&D losses most SEBs clock T&D losses in excess of 25%. This is just the tip of the iceberg. Orissa, which is one of the first states to start privatisation of its SEB clocked on an average a shocking 51% as T&D losses. Karnataka electricity board recently estimated its T&D losses to be around 37-42%.

A large part of these T&D losses stem from lack of proper billing infrastructure, encouraging pilferage of electricity. India is probably the only country in the world, which wastes more electricity than it consumes.

The SEBs seem to be caught in a vicious circle. They cant charge what they should, but have to improve. Should the tariffs be raised first, or the efficiency of the SEBs improved? Given the political nature of the issue, expect the pathetic state to last longer.

Equitymaster requests your view! Post a comment on "SEBs: Will they ever see black?". Click here!


More Views on News

CESC Share Price Up by 6%; BSE POWER Index Down 1.6% (Market Updates)

Jun 17, 2021 | Updated on Jun 17, 2021

CESC share price is trading up by 6% and its current market price is Rs 819. The BSE POWER is down by 1.6%. The top gainers in the BSE POWER Index is CESC (up 5.8%). The top losers are KALPATARU POWER and SIEMENS (down 0.2%).

Reliance Power Hits Upper Circuit. Board to Consider Raising Funds (Views On News)

Jun 10, 2021

Reliance Power to seek board nod to raise funds via equity issuance.

Tata Power's Major Contract from NTPC Puts Stock in Focus (Views On News)

Jun 3, 2021

A quick look into Tata Power's massive contract win today.

What's Fueling the Rally in Adani Transmission Shares (Views On News)

May 22, 2021

With this week's rally, Adani Transmission became the second most valuable company in the Adani group, surpassing Adani Ports.

Torrent Power Results: Why the Stock Hit a New 52-Week High (Views On News)

May 21, 2021

Torrent Power turns profitable. Here's our view.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jun 17, 2021 10:00 AM