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 Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.
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