Indian power sector at the crossroads: CRISIL

CRISIL Infrastructure Advisory has come out with its report on Indian power sector.

• Share of energy expenses in Indian household expenses declined for the first time in two decades- In the five years ended FY10, power tariffs grew at under 5% p.a. ; per capita income at 13.4% p.a., household expenditure at 10.6% p.a.
• Costlier imports now account for 15% of coal-based power generation- Sluggish growth in local coal production takes imports’ share in power to 15% in FY12 (7% in FY07). Imported coal priced at 1.6 times Indian coal on an equal energy basis.
• As tariff growth lags fuel prices and other costs, utility finances worsen- Revenue gap per unit of power grows at 33% p.a. in the 5 years to FY10. Accumulated losses at utilities estimated to have crossed Rs.2 trillion by end FY12. Had power tariffs growth in line with household expenses, the Rs,88,000 cr. loss at utilities in the 5 years to FY10 would have turned to a profit of Rs.8,000 cr.
• Indian power tariffs are lower than other countries ; vary across states. Though tariffs have risen in FY11 & FY12, further hikes needed
• The consumer can pay, the system must tap into it to restore sector viability
• Regular cost-linked tariff growth, higher domestic coal production are key

To read the full report click on the attachment

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