Delayed payments by public entities, staggered release of subsidies, Saubhagya drive keep losses high.
The reduction of electricity discoms’ aggregate technical and commercial (AT&C) losses, a key objective of the NDA government’s flagship Ujwal Discom Assurance Yojana (UDAY) for the revival of these entities, is hardly keeping pace with the target. While UDAY aims to bring down these losses to 15% by the end of the current fiscal, it stood at 23% at the end of June, just a percentage point down from a year ago. In fact, from the level at the end of March 2018 (19.1%), the losses went up, although seasonal variations of demand and collections played a role here.
The lapses are despite the virtual ultimatum given by the power ministry that AT&C losses above 15% won’t be compensated through tariffs after FY19.
Delayed payments by large consumers like state government departments and absence of timely release of subsidies have made difficult for the discoms to comply with the UDAY targets. Analysts said electrification of 1.4 crore new households discoms of Uttar Pradesh and Madhya Pradesh have already flagged rising rural supply under the Saubhagya scheme as a key contributor towards the rises in AT&C losses since October 2017.
Delayed receipts reflect adversely on AT&C figures because these deflate the revenue against the units of electricity sold. Non-payment of bills sixty days after the due date is treated as default.
Discoms in 24 states are participating in the UDAY venture.
Discoms in states where AT&C losses have traditionally been high such as Bihar (39%), UP (37.9%), Jharkhand (37%) and Chattisgarh (31.6%) appear to take a hit if the plan is implemented.
Helped by the UDAY scheme, discoms in four states —Maharashtra, Rajasthan, Haryana and Andhra Pradesh — have swung to profit in FY18, through checks on power purchase costs, improved billing and collection efficiencies and reduced interest costs.
Financial losses of UDAY discoms fell to Rs 17,352 crore at the end of FY18 from Rs 34,656 crore. However, sustainability of these entities depends on attaining the target AT&C loss levels. As the discoms cut down losses, their outstanding dues to power generators surged by over 150% to Rs 32,071 crore in FY18.