Inadequate revision of rates along with delay in filing tariff petitions are likely to remain an area of concern in the financial year 2020 for distribution companies (Discoms), says a report. Discoms have already managed to bring down losses and debt levels significantly under the UDAY scheme.
According to the rating agency ICRA, state distribution utilities in 17 of the 29 states have filed tariff petitions for FY20, reflecting less-than-satisfactory progress.
“The delay in filing of tariff petitions by the discoms is a deviation from terms of the UDAY scheme, wherein they were required to file the plans in a timely manner so that the State Electricity Regulatory Commissions (SERCs) would issue the tariffs orders by March end,” ICRA said.
It further noted that tariff hikes proposed and approved for the past 2-3 years have remained lower than what was agreed under UDAY, leading to persistent gap between average tariff and average cost of supply. The median tariff hike for discoms at the all India level has reduced from 8 per cent for FY15 to 4 per cent for FY16 and FY17 and further to 3 per cent and one per cent for FY18 and FY19, respectively.
“We expect the tariff hike to remain subdued for FY20 as well, given the limited or no tariffs hikes proposed by most of the discoms and in view of the upcoming Lok Sabha elections. This is likely to slow down the process of financial loss reduction which was initiated by the UDAY measure,” ICRA senior vice president Sabyasachi Majumdar said.