 "Losses for SEBs may reduce with improved coal supply & tariff hike")
State electricity boards across the country are still reeling under losses but there is a significant improvement in government subsidy disbursement and reduction in aggregate technical and commercial (AT&C) losses.
A report by JPMorgan on the Indian power sector said there could be significant reduction in the losses of SEBs after the coal auction as there will be fuel assurance and tariff hike, which is proposed for next fiscal.
Government subsidy disbursement improved significantly to 98 per cent of subsidy booked in FY13, against 86 per cent in FY12. “Losses net of subsidy reduced 10 per cent year on year to $11bn. Post subsidy SEB loss reduced from Rs 0.88/kWh in FY12 to Rs 0.81/kWh in FY13. Hopefully, the discipline of subsidy disbursement is here to stay,” said the report.
Reviewing the states, it said Andhra Pradesh (21 per cent), UP (17 per cent), Tamil Nadu (15 per cent) and Rajasthan (14 per cent) together account for 67 per cent of the losses reported (without subsidy) in FY13 followed by Haryana (8.5 per cent), MP (6 per cent) and Punjab (5 per cent). All state governments except Assam, Punjab, Karnataka and Tamil Nadu have released almost the entire subsidy booked by their respective distribution utilities.
The report said in FY13 all-India power generation grew by only 4.6 per cent and by 6.4 per cent in FY14. “We estimate that losses without subsidy could reduce from Rs 1,061 billion in FY13 to Rs 863 billion in FY14. With the tariff hikes in FY15 and proposed hikes for FY16, we expect losses to reduce further, particularly if FY16 onwards,” said the report.
The firm also optimistic that with coal auction, there would be significant benefit to state power companies. The report said moderation in imported coal prices, rupee stability and more recently aggressive bidding in coal auctions could lower SEBs power procurement bill and in combination with discipline on tariff hikes augurs well for loss reduction over FY14-16.
Aggregate Technical & Commercial (AT&C) losses reduced 125bps to 25.4 per cent in FY13is also a relief for the sector.
A report by JPMorgan on the Indian power sector said there could be significant reduction in the losses of SEBs after the coal auction as there will be fuel assurance and tariff hike, which is proposed for next fiscal.
Government subsidy disbursement improved significantly to 98 per cent of subsidy booked in FY13, against 86 per cent in FY12. “Losses net of subsidy reduced 10 per cent year on year to $11bn. Post subsidy SEB loss reduced from Rs 0.88/kWh in FY12 to Rs 0.81/kWh in FY13. Hopefully, the discipline of subsidy disbursement is here to stay,” said the report.
Reviewing the states, it said Andhra Pradesh (21 per cent), UP (17 per cent), Tamil Nadu (15 per cent) and Rajasthan (14 per cent) together account for 67 per cent of the losses reported (without subsidy) in FY13 followed by Haryana (8.5 per cent), MP (6 per cent) and Punjab (5 per cent). All state governments except Assam, Punjab, Karnataka and Tamil Nadu have released almost the entire subsidy booked by their respective distribution utilities.
The report said in FY13 all-India power generation grew by only 4.6 per cent and by 6.4 per cent in FY14. “We estimate that losses without subsidy could reduce from Rs 1,061 billion in FY13 to Rs 863 billion in FY14. With the tariff hikes in FY15 and proposed hikes for FY16, we expect losses to reduce further, particularly if FY16 onwards,” said the report.
The firm also optimistic that with coal auction, there would be significant benefit to state power companies. The report said moderation in imported coal prices, rupee stability and more recently aggressive bidding in coal auctions could lower SEBs power procurement bill and in combination with discipline on tariff hikes augurs well for loss reduction over FY14-16.
Aggregate Technical & Commercial (AT&C) losses reduced 125bps to 25.4 per cent in FY13is also a relief for the sector.