The recent hike in power tariffs in several states does not really amount to reform—all it does is provide a breathing space. A research report by Urmik Chhaya and Ravikiran Surana of Fortune Equity Brokers (India) Ltd points out that despite the tariff hikes, state electricity boards (SEBs) are going to make losses this fiscal year.
The recovery of past revenue deficits remains, with the current tariff hikes not even sufficient to achieve break-even levels. They also stress that supplying power to the agricultural sector is not the only reason for the losses of power distribution companies.
For instance, the chart shows that Maharashtra State Electricity Distribution Co. Ltd (MSEDCL), which is facing a liquidity crunch, has dues of over Rs 15,400 crore from various types of consumers.
The silver lining is that the Appellate Tribunal For Electricity last week directed all the state commissions to ensure that the tariffs for the fiscal year be decided before 1 April of the tariff year. In the event of delay by one month, the state commission must initiate suo motu proceedings for tariff determination. These measures should help in improving SEB finances, provided they are implemented.
Also See | Chart of the day (PDF)
PDF by Yogesh Kumar/Mint