“India Ratings and Research (Ind-Ra) believes that the bailout package of Rs 900 billion would only provide a temporary relief to power distribution companies (discoms),” Ind-Ra said in a statement
The Rs 90,000 crore package would provide only a temporary relief to power distribution companies but not long-term stability, India Ratings and Research (Ind-Ra) said on Tuesday.
Finance Nirmala Sitharaman earlier this month announced Rs 90,000 crore liquidity infusion for discoms, saying that they owe Rs 94,000 crore to power generation companies.
“India Ratings and Research (Ind-Ra) believes that the bailout package of Rs 900 billion would only provide a temporary relief to power distribution companies (discoms),” Ind-Ra said in a statement.
The loans will be provided to discoms against guarantees by state governments and will be used to clear their liabilities towards central public sector enterprise generating and transmission companies (gencos/transcos), independent power producers and renewable energy gencos.
However, this benefit has not been extended to discoms for payables towards state gencos.
Most of states and their discoms while joining the Ujwal DISCOM Assurance Yojana (UDAY) scheme launched in 2015 had agreed to achieve a number of milestones relating to aggregate technical and commercial (AT&C) losses, elimination of ACS-ARR gap (difference between average cost of supply and average revenue realisation), distribution transformer/feeder metering etc.
However, these milestones have mostly remained unachieved. As a result, despite the transfer of a major portion of debt from the books of discoms to state governments, the finances of several discoms have remained in reds and weak, even prior to COVID-19 related lockdown.
Source: PTI
