Rs 56K crore riding on expectations of meaningful power sector reforms

Mounting losses and debt levels of distribution entities,rising two fold to Rs 35,000-40,000 crore between 2007 and 2011,combined with the climbing interest rate repayments have severely constrained state power utilities,a study by Crisil Ratings has said.

Indian banks,Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) are primarily the lenders at risk. Their cumulative debt was estimated at approximately Rs 3 lakh crore at the end of March 2011. Crisils estimates say that tariff hike of at least 50 per cent can enable state utilities to break even and eliminate subsidies.