Debt-laden state-owned power distribution companies (discoms) continue to drag their feet on the then promised tariff revisions for the next fiscal, despite growing revenue gaps for several utilities, Icra said on Wednesday.
Delayed and inadequate tariff hikes that don’t reflect costs have been one of the primary reasons for sustained losses reported by these discoms.
“Distribution utilities in only 19 of the 29 states have filed tariff petitions for FY17 so far. This is less than satisfactory given that utilities were required to file tariff petitions for next fiscal by November 30, 2015 under the tariff regulations, so that tariff orders could be issued by the end of March 2016,” Icra said in its report.
It added that only four states — Bihar, Odisha, Mizoram and Manipur — have issued tariff orders for the next fiscal, while large states such as Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal are yet to file tariff petitions for the next fiscal. Among these, Rajasthan and Uttar Pradesh have officially signed up for the discom-revival plan UDAY and have also started issuing bonds against half of the discoms’ short-term liabilities.
The delay in filing tariff petitions is further compounded by inadequate hikes sought from the regulator. While discoms in states such as Bihar, Karnataka, Madhya Pradesh, Nagaland, Telangana and Uttarakhand have proposed a tariff revision in the range of 7%-25%, those in other states such as Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Punjab and Odisha have not proposed any tariff revision, and have left the treatment of the revenue gap to the discretion of the respective state regulators.
“The aggregate revenue gap arising out of the tariff petitions filed by the distribution utilities in 13 key states is estimated at Rs 733 billion, which is equivalent to 28% of the net aggregate revenue estimate,” Icra said.