BackGujarat, Punjab top electricity distribution utility ratings
The ratings are significant given that state electricity boards are laden with a debt of `3.04 trillion, of which Rajasthan alone accounts for `81,000 crore
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The state distribution utilities of Gujarat and Punjab have topped the latest power ministry ratings for parameters such as financial performance and reform measures.
A total of 40 state distribution utilities were rated in the third year of the exercise for 2013-14. The annual exercise for state power distribution utilities developed by the Union government, along with the Central Electricity Authority (CEA), India’s apex power sector planning body, and the Central Electricity Regulatory Commission (CERC), is aimed at helping banks and financial institutions assess risk while lending to the distribution utilities.
The ratings assume significance given that the state electricity boards (SEBs) are laden with a debt of ₹ 3.04 trillion, of which the Rajasthan utility alone accounts for ₹ 81,000 crore.
“All the four state distribution utilities in the state of Gujarat and the distribution utility in Punjab figure in the top-most category of A+. Two utilities have been placed in A category, 23 utilities in category B+/B and 10 utilities in category C+/C," the power ministry said in statement on Monday.
The exercise was conducted by rating agencies ICRA Ltd and CARE as the health of the power distribution sector holds the key to the success of generation projects in a sector seen as a key bottleneck in efforts to sustain and boost economic growth.
The government said the exercise will help “to devise a mechanism for incentivizing/dis-incentivizing the entities in order to improve their operational and financial performance", and “may serve as a basis for government of India assistance to the state power sector under various initiatives".
The ratings come in the backdrop of the National Democratic Alliance government preparing a blueprint for the supply of 24x7 power that will include customized plans for each state and lays special emphasis on green power and energy efficiency. The government, which has made boosting power generation a key policy priority, is looking to supply adequate power at affordable prices.
Cash-strapped SEBs have been unwilling to procure electricity because of the low tariffs they earn for power supply, the slow progress in reducing losses and high purchase costs. The exposure of the banking sector alone, excluding non-banking financial companies, may be around ₹ 2 trillion today, according to analyst estimates.
“Ind-Ra estimates outstanding debt of seven discoms (Rajasthan, Uttar Pradesh, Tamil Nadu, Haryana, Jharkhand, Bihar and Andhra Pradesh), which had their debt restructured, to have grown by 23.3% to around ₹ 2,754 bn in FYE15 over FY13," India Ratings and Research, the domestic arm of Fitch Ratings, said in a 29 July report.
With attempts being made to bridge the gap between the cost of electricity procurement and tariff realization, the government announced a bailout plan in September 2012 for discoms, which included regular tariff revisions as part of the conditions to be met. It has turned out to be a non-starter, Mint reported on 10 September 2014.
This comes at a time when there is a growing appetite for electricity in India. The country’s per capita electricity consumption has reached 1,010 kilowatt-hour (kWh) in 2014-15, compared with 957 kWh in 2013-14 and 914.41 kWh in 2012-13, according to CEA, India’s apex power sector planning body. This is expected to grow with India’s per capita power consumption being among the lowest in the world.
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