For the first time, the State Electricity Distribution Utilities (Discoms) have been rated on the basis of seven parameters including financial status and meeting regulatory norms.
The ratings would help lenders to decide on the rate of interest, conditionalities and additional securities.
The ‘integrated ratings’ are on annualised basis and spread from A+ to C (A+ is best and C is the minimum). The total score is 100.
Jyotiraditya M. Scindia, Minister of State for Power (Independent Charge), said the distribution sector was a vital link in the power sector value chain.
“It is the interface with the end consumers and responsible for generating revenues to sustain the entire value chain of this sector. Therefore, financial health of distribution sector is of utmost important.”
BENEFITS
“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 aggregate technical and commercial (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 renewable purchase obligation (RPO) compliance, among others.
SCORECARD
The ratings have been made by ICRA and CARE Ratings. The exercise does not cover 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.
STATES’ HELP
“The rating methodology factors in the important role of the State Government and the Regulator in making the environment congenial and conducive for the effective performance of the distribution companies,” Scindia said.
“We are pursuing a multi-pronged strategy to improve distribution utilities...reduction of AT&C losses will have positive impact on financial health of Discoms,” he added.
Scindia appealed to State Governments to keep the distribution utilities in good health.
The Minister ensured that at the Centre, he would try resolving all inter-ministerial issues.
siddhartha.s@thehindu.co.in