“The operational efficiency of the distribution utilities has to be improved. The states will have to review and revise the tariffs regularly to ensure the financial health of these utilities," Finance Minister Pranab Mukherjee said at the National Development Council (NDC) meeting.
Planning Commission Deputy Chairman Montek Singh Ahluwalia too has warned that source of funding to the sector will soon dry up.
Commercial banks have to watch their balance sheets and cannot provide loans indefinitely, Ahluwalia said, adding, some distribution firms have not raised tariffs for 10 years and their total losses are estimated to be Rs 70,000 crore.
On the recent problems in power generation, Mukherjee said the sector is facing shortage of coal and natural gas.
“Issues like land acquisition, deteriorating health of the state electricity boards and environmental clearances have also been adversely affecting this sector," he said.
The efficiency of distribution companies remain “woefully low", and the aggregate technical and commercial (AT&C) losses average over 40 per cent, Mukherjee noted.
He further said that large number of power projects requiring funding of Rs 5,000 crore or more are held up due to delay in clearances, both at Centre and state levels.
“While I am working with my colleagues at the Centre, I strongly urge chief ministers to set up a mechanism for according early clearance to such projects," he said. MORE