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HomeNewsDoldrums to continue for power distribution sector: Ind-Ra

Doldrums to continue for power distribution sector: Ind-Ra

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New Delhi, March 8 : Ratings agency India Ratings and Research has maintained a negative outlook on the power sector for FY22, on account of a further weakening in the financial position of distribution companies due to Covid-19 led business disruptions.
According to the ratings agency, the discoms relief package of Rs 1.25 trillion was expected to reduce the overall discoms dues, however, lower-than-expected disbursements under the package along with the discoms’ further weakened profile due to Covid-19 had led to a continuous build-up of dues by end-December 2020.
“Moreover, the inability of the states to avail tranche-2 of the package may keep the outstanding dues high for a long period,” the ratings agency said in a statement.
“The tranche-2 disbursements are dependent on the implementation of undertakings given at the time of sanction and disbursement of tranche-1 such as smart meters installation in government departments, liquidation plan for clearing of dues by state governments towards unpaid electricity dues and subsidy amount to discoms.” As per the agency, the power demand however has started improving post opening-up of the economy from September 2020 which is expected to lower the build-up of current dues by discoms in FY22.
“Ind-Ra expects the power demand to grow at 9-10 per cent YoY in FY22, and hence the thermal plant load factors would recover. However, the recovery to above 60 per cent would be beyond FY23, given the continued thermal capacity additions of 6-8 GW.”

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