Discoms are also expected to end up with a remarkable Rs 4.5 lakh crore due to borrowers by the end of this fiscal year, recording a 30 per cent annual rise, and worsening their credit profiles.
It was difficult for discoms to start reading exercises and receive payments from customers in the midst of the lockdown.
Losses of state-owned power distribution companies (discoms) are seen to be around Rs 58,000 crore in the current fiscal because of lower revenue generation amid muted power demand due to the lockdown, analysts at Crisil Ratings said. Losses in FY20 were to the tune of around Rs 30,000 crore, according to an estimate.
Discoms are also expected to end up with a remarkable Rs 4.5 lakh crore due to borrowers by the end of this fiscal year, recording a 30 per cent annual rise, and worsening their credit profiles.
It was difficult for discoms to start reading exercises and receive payments from customers in the midst of the lockdown. On top of that, subdued industrial activities have taken a toll on their finances, as these high-paying market segments contribute more than 70 per cent of the revenue from discom, but consume only 50 per cent of the total electricity supply.
This is seen to widen the gap between cost of supply and revenue realised (ACS-ARR gap) for discoms. “Higher costs and constrained cash inflows amid declining demand mean the per-unit operating gap of discoms will widen to 83 paise per unit by the end of this fiscal,” Manish Gupta, senior director, Crisil Ratings said. The ACS-ARR gap currently stands at Rs 0.37/unit. “Cash losses this fiscal may almost double to Rs 58,000 crore over last fiscal,” the agency pointed.
The Government has announced a R 90,000 Crore Discom Loan Package to address the Coronavirus Crisis. The funds will be used primarily to clear the charges for power generators. However, Crisil noted that "this would at best be a temporary stitch" and higher cash losses could lead to "payables re-inflating without incremental funding or state support."
According to the unaudited details received by the States, the financial losses of discoms at the end of FY19 amounted to more than Rs 27,000 crore. According to audited results, discom losses dropped by 13.2 per cent to Rs 33.365 crore in FY18. Discoms traditionally face cash-flow problems because state electricity regulators rarely and insufficiently raise consumer tariffs. Dues from state government agencies and local civic bodies, glued to a whopping Rs 50,000 crore at the end of September 2019, also substantially hinder the potential of discom to turn around.
