Monday, September 24, 2012

Power Bailout, A Temporary Relief!

Power black out incidences are often reported in most regions of the country with the worst being noticed in July when 670 million people were affected for two consecutive days. Most of the state-owned Power Distribution Units are incurring big losses and reforms from the government can bring rays of relief. ‘Something is better than nothing’ goes the saying. At least the government’s measures to offer a bailout to the cash-strapped power distributors would provide temporary relief.

This is no reform but mere restructure. According to analysts, long term energy problems will not be resolved and problems will only add up. $35 plus billion in debt will get restructured with this measure. This has triggered the boost in price of power shares by 2-3 percent in the Indian bourses (24th September).

Under this bailout plan, provincial governments can look forward towards taking on half of their short-term debt and translate them into long-term bonds.

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