fe-ICRA SNAPSHOT
The Indian power scenario continues to be plagued by perennial shortages, skewed tariffs, sub-distribution networks, high aggregate technical and commercial losses
The country is deficient in meeting its energy require-ment as well as peak load demand. Problem becomes acute during peak hours and thus necessitates load shedding to maintain the health of the grid. Power generators are unable to meet the connected peak load of about 12%. States with more than high peak deficits include UP, J&K, MP, Bihar, Jharkand and Tamil Nadu
Major Players
SEBs control around 90% of distribution except in Orissa, Delhi, Kolkata, Mumbai, Ahmedabad and Surat where private players are in control. Till 1991, most power utilities were state controlled but now many states have unbundled these boards which function basically as distribution utilities. Their share in generation is lesser and they purchase power from independent producers and central units like NTPC, NPC & NHPC Intra-state transmission is the sole responsibility of SEBs while Power Grid Corporation handles inter-state transmission
Key Issues
Although returns are assured, state entities are in a financial mess. The ir losses are very high at more than 40% (including theft). Out of the total energy generated, it is estimated that about 55% is billed and only about 41% is realised. Industrial consumers are gradually moving outside the grid and setting up captive power units thereby distorting the revenue mix.
| CEO SPEAK |
I expect the Budget to deal favourably with issues of freight on coal, excise and customs duties on naphtha, besides rationalisation of customs duties on import of spares and modernisation. Extend section 81I (A) benefits to new generating plants.
RC P Jain
Chairman & MD, NTPC |
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Poor financial state of SEBs deters investors even though returns have been assured. However, this has changed in the recent past, in particular, after the Electricity Act 2003
fe Perspective
Reduce duties on distribution (at present 20-40%)
Nil import duty on generation equipment (21.6%)
Eliminate differences between equipment and project imports
Single rate for all segments
CII suggestions
Revive talks with states for a minimum power tariff for all segments
Reverse promise of free power to farmers to attract private investment
Urgently put in practice provisions of Electricity Act 2003
FICCI Wishlist
Clarify what tantamounts to 50% of book value of plants and machineries for purposes of section 80I A tax benefits
Clarify if distribution lines mean distribution network or just lines
