24 Indian states hike power tariffs

24 Indian states hike power tariffs

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Asia Bizz: 24 Indian states have revised their respective electricity tariffs in the past 18 months. The tariffs were revised after facing bad condition of power-distribution companies in the Asian nation.

The poor financial conditions of the power distribution companies were due to the low-tariff regime. Such a scenario also raised concerns of possible defaults in the financial system.

Motilal Oswal, a brokerage firm, stated in a recent report that power distribution companies have favoured disciplined efforts to manage cost, tariff hikes and file tariff petition. The firm added that during the past 18 months, 24 states have raised the tariffs and that they continue to believe that FY 2012 was the tipping point in terms of deterioration in SEB finances.

Reports say that higher tariffs are the main reason of the improved situation. The state of Tamil Nadu is the latest among the Indian states that have increased tariffs to 37 percent. The other states that have also increased power tariffs include Andhra Pradesh, Punjab, Madhya Pradesh, Rajasthan and Bihar.

Last year, the Shunglu Committe on Financial Position of Distribution Utilities suggested some measures to absorb the losses of the power distribution companies.