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Financial blackout

  • 14/09/1995

The National Working Group on Power which includes 3 former Chairpersons of the Central Electricity Authority, showed the impact of these projects on the tariffs, the deficit of the SEBs and the outflows from the economy. In brief this reveals that:

The SEBs will have to incur additional losses of Rs 5,000 crore per year (over 50 per cent of their current losses) at current tariff rates, if 5,000 MW is contracted for from the foreign investors.

After paying for foreign investors' power, the SEBs will have little left to run their own stations or take care of distribution. This will endanger the existing installed capacity of 80,000 MW in the country.

If the SEBs can not absorb these losses, the electricity tariffs will have to be raised drastically - by about 25 per cent to 50 per cent. If the agricultural tariffs are held near the 50 paisa limit, the industrial and domestic tariffs may have to be doubled.

Even after increasing tariffs to these levels, the foreign investor-owned power will have to be subsidised by the Boards by about a rupee for every unit supplied to the consumer - a subsidy to the tune of Rs 3,500 crore.

Given the load fac tor of 62 per cent to 64 per cent in India, guaranteed offtbke of 80 per cent to 90 per cent as is being committed (for example, Enron) will mean SEBs will have to step down their own generation, increasing the above losses even further.

The Indian manufacturers cannot compete for power equipment as the projects have equipment manufacturers in the consortia and have tied equipment. The existing capital base of Rs 30,000 to Rs 40,000 crore in this sector is in danger of being wiped out.

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