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Power Minister bats for increased participation of pvt firms in electricity distribution

24 Jun 2014 Evaluate

Three days after meeting heads of private power companies to resolve issues plaguing the sector, Piyush Goyal, minister for power, coal and renewable energy held a meeting with country’s top bankers, including ICICI Bank MD and CEO Chanda Kochhar and SBI chairperson Arundhati Bhattacharya to discuss the issues faced by these banks for funding power projects, which coupled with high debt have hit the finances of distribution companies. In the meeting, the banking sector expressed apprehensions over a lack of economic viability of assets in the generation space and the mounting losses for state distribution companies.

In a resolve to these problems, the power minister batted for increased participation by private companies in electricity distribution to reinstate investor confidence in the sector. It highlighted that government was keen to increase the private sector’s participation in electricity distribution, to ensure last-mile funding and low cost of borrowings for projects. Cities, like Delhi, Mumbai, Kolkata and Ahmedabad, which currently have privately-owned power distribution firms, state electricity boards, which distribute power in most other parts of the country, have been struggling with financial problems. He also underscored the measures taken by UPA government and RBI to turn-around the sector.

The minister pointed that while previous government approved the restructuring of Rs 1.9 lakh crore of debt of state electricity boards, RBI relaxed the external commercial borrowing norms for companies raising foreign funds for infrastructure projects especially in sectors such as power. Further, he committed that his government in next few months would assign significant thrust to enhance the transmission and distribution infrastructure in the country from states, banks and the Centre. Goyal also said he would help power producers resolve the situation, though he warned them against any form of cartelization.

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