Blackout underscores investment shortfall in power: S&P
08 Aug 2012
A recent massive power outage in India highlights the country's poor power infrastructure and to the urgency of improvements, asserts a new report, Adequate Infrastructure Is Essential To Lighten India's Power Woes, published today by Standard & Poor's Ratings Services.
Activity in much of India ground to a halt early last week as the outage plunged 20 of the country's 28 states into darkness for nearly two days.
"The blackout was, in our view, a consequence of capacity growth and infrastructure improvements that severely lag the country's mushrooming demand for power," said Standard & Poor's credit analyst Rajiv Vishwanathan.
"However, the lack of fuel security is a major constraint to the growth of India's power generation capacity, and the slow pace of tariff reforms is hindering infrastructure investment at the state level," Vishwanathan adds.
According to the report, India's aggressive economic growth targets for the next five years will add to the already high demand for power. This calls for a significant increase in funds to the sector. Power capacity has increased about 41 per cent over the past decade.
"But, while the government has increased funding allocations to the power sector in its recent five-year plans, it has consistently failed to meet its planned capacity expansions."
