Discoms being rated for first time

Our Bureau Updated - March 19, 2013 at 05:24 PM.

For the first time, the State Electricity Distribution Utilities (Discoms) have been rated on the basis of seven parameters including financial status, meeting regulatory norms and others.

The 'integrated ratings' are on annualised basis and spread from A+ to C (A+ is best and C is the minimum).

"The attempt is to develop realistic assessment of strength and weakness of the Discoms. It would provide a tool to banks and financial institutions to calculate their business risks," said Power Secretary P. Umashankar, while unveiling the ratings mechanism.

The Secretary said that ratings would cover year-on-year comparison of AT&C losses, regulatory environment, payments of subsidy and cross subsidy, quality of accounts, assets created, automated pass-through of fuel cost, short-term power purchase, debt servicing and RPO compliance, among others.

The ratings would help lenders to decide rate of interest, conditionalities and additional securities.

The ratings have been made by ICRA and CARE Ratings. The exercise does not cover state power departments and private utilities.

Out of the 39 Discoms rated, Gujarat's four utilities scored the best rating of A+. They include Dakshin Gujarat Vij Company Ltd, Uttar Gujarat Vij Company Ltd, Madhya Gujarat Vij Company Ltd and Paschim Gujarat Vij Company Ltd.

The worst rated utilities are from Uttar Pradesh. They include Paschimanchal, Dakshinanchal, Kanpur and Madhyanchal.

Jyotiaditya M Scindia, Minister of State for Power (Independent Charge) said that electricity distribution has been an area of concern in the country and Discoms play an important role.

"We are pursuing multi-prong strategy to improve distribution utilities...reduction of AT&C losses will have positive impact on financial health of Discoms," he said.

Scindia appealed to State Governments to keep distribution utilities in good health. The Minister ensured that at Centre he would try resolving all inter-ministerial issues.

Some of the findings during the ratings exercise :

1. Gujarat was the best performance on cost coverages.

2. Few States saw increase in AT&C losses because of more rural supplies

3. Some Discoms in States such as Gujarat, Maharashtra, Karnataka, Madhya Pradesh, Haryana, Kerala and Chhattisgarh have received regular subsidies from States.

siddhartha.s@thehindu.co.in

Published on March 19, 2013 11:32