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Discom losses seen doubling to Rs 58,000 crore in FY21 you need to know

Discom – Analysts at Crisil Ratings say that State owned power distribution companies are expected to face losses around Rsm 58,000 crore in this time frame of current fiscal year. This is mainly due to the decreased levels of revenue. There is minimal demand in the market because of the constraints out forward by the lockdowns. As per the estimate loss amount is calculated near Rs. 30,000 crore.

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Distribution companies also called as Discoms may record a 30 percent annual increment in debts and have a bad credit profile, in this case they are seen to end up owing Rs. 4.5 lakh crore to the levels by the end of this fiscal.

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This is main reason due to which the gap is seen to widen between cost of supply and revenue realised gap for discoms. “Higher costs and constrained cash inflows amid declining demand mean the per-unit operating gap of discom will widen to 83 paise per unit by the end of this fiscal,” Manish Gupta, senior director, Crisil Ratings said.

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Lockdown imposed difficulties for them to collect payments and continue meter readings directly from consumers and also the disruption in economic activity massively affected their finances as 70 percent of discom revenue comes from high paying Consumer segments. However, they use only 50 percent of the overall electricity supply.

The government is to the rescue here. It has announced a Rs. 90,000 crore loan package for Discom which will be used to clear the dues of these power generators. However, this may be only a short term remedy as higher cash losses could lead to payable re-watch inflating sans increased funding or state support, said Crisil. These companies are prone to cashflow problems because state electricity regulators raise consumer tariffs inappropriately.

As the per the unaudited data, the generators’ Monetary losses were more than Rs. 27,000 crore at the end of financial year 2019. While according to audited information the losses dropped by 13.2 percent to Rs. 33,365 crore in 2018.

 

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