Rs 90,000-crore discom loss projections for FY21 ‘grossly inflated’: Power ministry

By: |
August 19, 2021 2:30 AM

The rise in losses have been attributed to the possible drop in the revenue of discoms in FY21, with demand from high-paying industrial and commercial consumer segments getting disrupted amid the lockdowns to contain the coronavirus. Ind

Analysts at Crisil have pointed that discom losses will be 40% higher in FY22 than in FY20.Analysts at Crisil have pointed that discom losses will be 40% higher in FY22 than in FY20.

Projections by certain quarters that financial losses of state-run power distribution companies (discoms) might have surged to Rs 90,000 crore in FY21 are “grossly inflated”, the Union power ministry said on Wednesday. A report released by Icra in March had indicated that discom losses may have increased to Rs 90,000 crore in FY21. Subsequently, a report co-authored by Niti Aayog and energy think tank RMI released in early August has also estimated the loss figure to be at similar levels.

The rise in losses have been attributed to the possible drop in the revenue of discoms in FY21, with demand from high-paying industrial and commercial consumer segments getting disrupted amid the lockdowns to contain the coronavirus. Industrial and consumer segments traditionally contribute more than 70% of discoms’ revenue, but use about 50% of the overall electricity supplied.

“Under the current regulatory system of electricity tariff determination, a mechanism of true-up’s already exists that would allow the recoveries of losses arising due to change in consumer category-wise consumption patterns coming with Covid-induced lockdowns, to be covered through tariffs in the subsequent year,” the power ministry said in a statement.

The losses of discoms have come down from Rs 33,894 crore in FY17 to Rs 32,898 crore in FY20, the ministry said. The losses had surged to Rs 49,623 crore in FY19. These losses are based on the amount of subsidy booked by the discoms which are to be disbursed by their respective states. On a subsidy-received basis, discom losses stood at Rs 61,360 core in FY19, and Union power minister RK Singh recently said that the losses on a subsidy-received basis were down 38% on year at around Rs 38,000 crore in FY20. Analysts at Crisil have pointed that discom losses will be 40% higher in FY22 than in FY20.

“The adverse performance of discoms across the country already seem to have gone past the inflexion point, and are showing green shoots of turnaround,” the power ministry statement added. As many as 25 out of the 41 state-run discoms had filed their tariff revision petitions in for FY20, which, sector experts believe have contributed towards reduction in losses. Tariff order for FY20 was issued in a timely manner for discoms, including the ones in Haryana, Uttarakhand, Gujarat, Maharashtra, and Karnataka. Only 13 discoms had filed their tariff petitions on time in FY19.

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