‘UDAY’ all the way

Debt refinancing un­der UDAY is lead­ing to an im­proved liq­uid­ity for the dis­coms. Book losses in FY2017 es­ti­mated to come down to Rs 37,500 crore: ICRA

Power Watch India - - T&D -

ICRA es­ti­mates the debt refinancing/takeover by state gov­ern­ments to lower the dis­com book losses from Rs 67,000 crore in FY2015 to Rs 37,500 crore in FY2017. The progress in im­ple­men­ta­tion of the Ujwal Dis­com As­sur­ance Yo­jana (UDAY) has been sat­is­fac­tory with 22 states/ union ter­ri­to­ries (UT) join­ing the scheme and 13 of these states is­su­ing bonds worth Rs 2.32 lakh crore as on date to­wards refinancing the debt on the books of the state-owned dis­tri­bu­tion util­i­ties (or dis­coms).

Girishku­mar Kadam, Sec­tor Head and Vice Pres­i­dent, ICRA Rat­ings, said, “The debt refinancing un­der UDAY scheme is re­sult­ing into an im­prove­ment in the liq­uid­ity pro­file of the dis­coms in these states and is likely to im­prove the abil­ity of the dis­coms to off-take power and pay power gen­er­a­tors in a timely man­ner, go­ing for­ward.”

ICRA, how­ever, notes that progress in fil­ing of tar­iff pe­ti­tions for FY2018 by the state-owned dis­coms is less than sat­is­fac­tory with only 16 out of the 29 states hav­ing filed so far. While the de­lay can be at­trib­uted to re­cently-con­cluded assem­bly elec­tions in few states, the sub­se­quent de­lay in is­suance of tar­iff or­ders con­tin­ues to be ob­served in ma­jor states like Ra­jasthan and Tamil Nadu.

The dis­coms are re­quired to file the tar­iff pe­ti­tions by 30 Novem­ber 2016 as per tar­iff reg­u­la­tions so that tar­iff or­ders could be is­sued by the State Elec­tric­ity Reg­u­la­tory Com­mis­sions (SERCs) by 31 March 2017. Out of the 22 states/ UTs that signed up for UDAY, only 14 states/ UTs have filed a tar­iff pe­ti­tion for FY2018.

More­over, tar­iff or­ders for FY2018 have been is­sued in only four states as of now namely Ma­nipur, Mi­zo­ram, Odisha and Bi­har with av­er­age tar­iff hike of 5.6%, 3.6%, 1.4% and 55% (with­out con­sid­er­ing gov­ern­ment sub­sidy; with sub­sidy tar­iff hike is lower at 28%) re­spec­tively.

“While the SERC in Bi­har has al­lowed a sharp tar­iff hike for FY2018 even af­ter ac­count­ing for the sub­sidy sup­port - which is a pos­i­tive reg­u­la­tory mea­sure, the pos­si­bil­ity of a fur­ther in­crease in sub­sidy sup­port can’t be ruled out so as to avoid a tar­iff shock to the con­sumers, in our view. In this con­text, along with tar­iff ad­e­quacy, a fo­cus on ef­fi­ciency im­prove­ment; ad­e­quate sub­sidy and op­er­a­tional fund­ing sup­port (if any) from state gov­ern­ments re­main cru­cial, for a sus­tain­able im­prove­ment in the fi­nan­cial pro­file of the dis­coms,” Kadam added.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.