Preference For State Utilities Led To Power Sector Stress: RBI


Preference For State Utilities Led To Power Sector Stress: RBI

The Reserve Bank of India (RBI) has said that stress in the power sector has been caused by state-run utilities being favoured at the expense of private ones amid an escalating row with the government over the central bank’s February 12 circular that tightens loan default rules.

A government official said the RBI’s response to the Centre’s submissions in the Allahabad High Court was made in a letter to the Department of Financial Services, which had presented a report on stressed power assets to the bench. The banking regulator pointed to the power ministry’s proposal to exempt all central public sector units (CPSUs) from mandatory tariff-based competitive bidding, he said.

In its letter, RBI has referred to the draft tariff policy circulated by the government for public consultation as per which new power plants of CPSUs such as NTPC may not have to compete with private companies. Read More

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