Operating Losses of Discoms to Come Down to Rs 25k Cr This Year

Chennai: Operating losses of discoms are expected to come down to Rs 25,000 crore after remaining above Rs 30,000 crore levels in the last two fiscal. The cost of supply and realisable revenue gap too has come down by 15 to 20 per cent.

The operating losses are expected to slip from more than Rs 30,000 crore in the past two fiscals to around Rs 25,000 crore this fiscal. However, they will still lead to increased debt in balance sheets to fund the losses, finds Crisil.

According to Shailendra Dubey, of AIPEF, the operating losses have been coming down in the past few years. “The Revamped Distribution Sector Scheme (RDSS) has been providing grants to modernise the distribution system and this has helped discoms reduce losses,” he said.

The main objectives of RDSS are the reduction of Aggregate Technical & Commercial (AT&C) losses to pan-India levels of 12-15 per cent by 2024-25 and the reduction of average cost of supply per unit of power minus average revenue realized (ACS-ARR) gap to zero by 2024-25. While AT&C losses have been brought down to the desired levels, the ACS-ARR gap is still nowhere near zero. Crisil finds that it will come down by 15-20 per cent this year, but still be at 40-45 paise per unit.

“We will see the ACS-ARR gap hitting zero only when we achieve 100 per cent metering. Most of the states provide power connection for farming without metering,” said Dubey.

According to Ankush Tyagi, Associate Director, CRISIL Ratings, narrowing of the ACS-ARR gap is based on an expected moderation in ACS from its peak last fiscal, led by a reduction in power cost as domestic power supply improves and cost of generation reduces. It is also supported by slow but steady improvement in ARR and a reduction in AT&C losses.