Discom losses to nearly halve by fiscal 2019 on reforms: Crisil

Aggregate losses of the discoms are expected to decline by 46% to about Rs.20,000 crore from Rs.37,000 crore now, Crisil said in a report


State discoms have collectively borrowed more than <span class='WebRupee'>Rs.</span>4 trillion till the end of March 2015. Photo: Indranil Bhoumik/Mint
State discoms have collectively borrowed more than Rs.4 trillion till the end of March 2015. Photo: Indranil Bhoumik/Mint

Mumbai: Power distribution companies (discoms) that have joined the Ujwal Discom Assurance Yojna (UDAY) scheme will be able to more than halve their loss to 28 paise per unit by fiscal 2019 compared with 64 paise in fiscal 2016, research and ratings firm Crisil Ltd said Thursday.

Aggregate losses of these discoms are expected to decline by 46% to about Rs.20,000 crore from Rs.37,000 crore now, Crisil said in a report.

This gap or loss is calculated as average revenue realised minus average cost of supply. The gap will still be well above the ‘nil’ that UDAY targets because some states with high aggregated technical and commercial (AT&C) losses are not adequately prepared for various reasons, the report said.

“Rajasthan, Haryana, Chhattisgarh, and Uttarakhand are expected to fare better in the implementation of UDAY, so are likely to be the biggest beneficiaries. However, UP, Bihar and Jammu and Kashmir are expected to be the laggards. These three states would account for almost two-thirds of the gap in fiscal 2019,” said Gurpreet Chhatwal, business head - large corporates, Crisil Ratings.

State discoms have collectively borrowed more than Rs.4 trillion till the end of March 2015.

The government had launched the UDAY scheme last year for operational and financial turnaround of power discoms. So far, a total of 17 states or union territories have signed up for UDAY.

The combined discom debt, including central PSU dues, that would be restructured in respect of these states is around Rs.2.57 trillion, which is around 68% of the total outstanding discom debt as on 30 September 2015.

India’s electricity generation growth was 1.3% year-on-year in quarter ended 30 September from 9% in quarter ended 30 June, hurt by poor demand from discoms and a good monsoon, according to a Religare note on 18 October.

“With the UDAY scheme likely facing implementation delays, demand from discoms is set to be pushed back further,” the Religare note said.

About 40,000 MW of commissioned thermal power capacity and about 24,000 MW of under-construction capacity is currently under risk, according to Crisil’s estimates.

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