15 nightclubs reduce losses by more than 10%
NEW DELHI : Indian public electricity distribution companies (discoms) seem to have reached a milestone, with 15 discoms from Andhra Pradesh, Gujarat, Tamil Nadu, Karnataka, Uttar Pradesh, West Bengal, Manipur and of Madhya Pradesh reducing their losses by more than 10% in 2019-20.
According to the ninth annual integrated assessment of electricity distribution utilities of 41 discoms in 22 states, released on Friday, “fifteen utilities were able to reduce the AT&C (technical and commercial aggregate) loss parameter by more than 10%.
“The average level of AT&C loss of rated discos improved to 21.16% in FY20, from 21.85% in FY19,” the rating report said.
This is gaining importance because discoms have been the weakest link in the electricity value chain, plagued by low collection, an increase in the cost of purchasing electricity, tariff increases and inadequate grant payments; and increasing contributions from ministries.
However, experts believe the financial health of nightclubs deteriorated in 2020-21 during the coronavirus pandemic, as demand for electricity shifted to homes, leading to lower achievements.
This comes against the backdrop of last month’s approval by the Cabinet Committee on Economic Affairs of the marquee ₹$ 3.03 trillion blackout reform program, in which the Centre’s share will be ₹97,631 crores. Funds will be disbursed to discoms subject to meeting reform milestones.
The ambitious program aims to reduce India’s average overall technical and commercial loss from the current level of 21.4% to 12-15% and gradually reduce the gap between the cost of electricity and the price at which it is. delivered to “zero” by 2024-25.
In addition to dcom losses down sharply by more than a third for ₹38,000 crore in 2019-20 from ₹61,360 crore in FY19, the gap between the cost of electricity purchased (ACS or average cost of supply) and supplied (ARR or average achievable income) also fell to 38 paise per unit in FY20 from 42 paise in FY19 .
“Average cost coverage improved to 0.87 times in the ninth scoring exercise, compared to 0.86 times in the eighth scoring exercise,” according to the staff report.
“In total, 16 electricity distribution entities (out of a total of 41) showed improvement in their cost coverage ratios. Of these, 6 discoms showed more than 10% improvement in their cost coverage ratio, ”the report adds.
The annual exercise for state electric discoms aims to help banks and financial institutions assess risk while lending to distribution services. The dcoms due to production companies (gencos) at the end of May amount to ₹70,153 crores.
“Sixteen discoms have a positive debt-to-equity (D: E) ratio, ten of which have a D: E below 2.0, indicating strong support from state governments,” the report says.
In addition, India’s electricity demand is picking up after the trough of the second wave of the coronavirus pandemic, with the country’s peak electricity demand surpassing the 200 gigawatt (GW) mark.
“In terms of the regulatory environment, the tariff order for fiscal year 21 was issued for thirty-six discoms, while the same was not issued for five discoms,” said the report and added: “In In terms of availability of audited accounts, 35 discoms submitted audited annual accounts, while six discoms submitted provisional accounts. “
These rankings come as the Union Cabinet may soon consider the Electricity (Amendment) Bill, 2021, which aims to cut the supply of electricity, allowing multiple distributors in the same area and in giving consumers the option to change their electricity supplier, as reported by Mint. Friday. According to Lok Sabha’s bulletin, the bill is on the government’s indicative list of legislative and financial affairs which is expected to be discussed in the monsoon session of parliament which begins on Monday.
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