As a long-term solution to the woes of the heavily stressed power sector, which is likely to seek nearly Rs 70,000 crore debt restructuring this fiscal, the SBI Chairman, Mr Pratip Chaudhuri, has called for listing of these highly leveraged state-run utilities.

“My personal view is that all the discoms (distribution companies) and generating companies should try to get listed,” Mr Chaudhuri said here over the weekend.

Pointing out that “stock market pressures” can help drive professionalism in such companies, he said, “listing will make them more viable and would make them adopt more enlightened and commercial policies.”

Explaining the benefits of going public, he further said once listed these state-run utilities will have to abide by corporate governance, and that the pressure to manage “investor perceptions” will also help in efficiency.

However, he added that State Bank of India does not have any exposure to such assets which are under stress now.

“We don’t have much exposure to the discoms. Our exposure to the power sector is confined to the top-end,” he said. Welcoming the recent 24 per cent hike in tariffs in Delhi, Mr Chaudhuri said it will help the borrowers become more viable.

Recently, an IBA panel had called for mandatory annual tariff hikes by state-run utilities as a pre-condition for further lending to them.

Already over half-a-dozen discoms including Haryana, Tamil Nadu, Rajasthan and Punjab, among others, have gone for CDR worth Rs 30,000 crore last fiscal.

Meanwhile, the Reserve Bank has also warned against the asset quality of banks’ exposure to the power sector.

(This article was published on July 1, 2012)
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