(ET)
The government is considering issuing an advisory to central public sector enterprises (CPSEs), including NTPC and Power Grid Corporation (PGCIL), that they halve the fixed charges they collect from state power distribution companies. This is the first time power generation and transmission plants with regulated tariffs might be advised by the power ministry to reduce charges as such issues are dealt by the Central Electricity Regulatory Commission (CERC).
Lenders and project developers said this would hurt investment sentiment toward the projects considered to be safe havens, while some industry insiders said extraordinary times called for such measures. “The lowering of charges or return on equity has its implications. We are fiddling around what a regulated regime is and what equity holders expect when they have invested,” said a senior government official, who did not wish to be identified. “We have to look at the legal implications because in a regulated regime any investor, be it domestic or foreign, expects that the equity will be fixed. Whether we can fiddle with that or not is being internally examined.”
