A new study by the Investment Information and Credit Rating Agency (ICRA) has determined that private investment is being deterred by the poor financial situation found in India’s state electricity boards (SEBs).
While acknowledging that following the Electricity Act of 2003 new opportunities will emerge and that significant changes have taken place in the last year, the critical parameter remains the profit or loss position of the state concerned, says the report.
The Act provides the option for power producers to sell their electricity directly to consumers, bypassing SEBs. The reports adds, “The continuing process of deregulation of SEBs will make these opportunities increasingly attractive.”
The demand for power is expected to continue to increase over the medium to long term, requiring a significant increase in generation and distribution capacity, but the country lost 18 TWh of power due to shortages of gas and coal, according to the Union Power Ministry.