Discom Losses to Be 40 Per Cent Above Pre-Pandemic Levels: Crisil
It added the costs are also likely to surge primarily because of higher interest burden because of ballooning debt
New Delhi : Cash losses of power distribution companies (discoms) will remain elevated at around Rs 46,000 crore this fiscal, or 40 per cent higher than the Rs 33,000 crore seen in the pre-pandemic levels of fiscal 2020, Crisil Ratings said.
This is because revenues will remain constrained as demand from high-paying, commercial and industrial (C&I) consumers have been lower than seen during the pre-pandemic period, while tariff hikes have been inadequate, the ratings agency said.
It added the costs are also likely to surge primarily because of higher interest burden because of ballooning debt.
The nationwide lockdowns imposed in the first half of the last fiscal brought C&I activities to a standstill and evaporated an estimated quarter of demand from high paying C&I consumers for the full fiscal 2021 as compared to fiscal 2020.
A study of 34 state discoms (from 15 states), which account for over 80% of India’s power demand, shows as much.
“In fiscal 2022, while industrial demand will recover with an expected recovery in industrial activity amid healthy GDP growth, forecast at 9.5% on-year, commercial demand will remain subdued as people remain cautious in stepping out of their homes. Consequently, we expect C&I consumers to account for a lower 48 per cent of demand in fiscal 2022, compared with 51 per cent in fiscal 2020.” Ankit Hakhu, Director, CRISIL Ratings said.
Thus lower contribution of the C&I segment, which pays Rs 3-4 per unit more compared with agriculture and domestic consumers, will constrain overall realisations for the discoms, Crisil said.
Further, tariff hikes by just 6 out of 15 state discoms analysed, would translate to a mere 1-2 per cent increase in average realisations from fiscal 2020 levels.
Operating costs may also inch up 3 per cent over fiscal 2020 because of higher power purchase cost driven by pricier coal, transportation and steady increase in the administrative costs. Diesel prices are up over 35 per cent from fiscal 2020 levels.
Source : crisil ratings
