Three out of the four power distribution companies in the Telugu-speaking States of Andhra Pradesh and Telangana have been rated as “moderate operational” in terms of performance by the Ministry of Power as part of the fifth annual integrated rating of the State distribution utilities.
The rating agency Credit Analysis and Research Ltd (CARE), which has analysed and assessed the performance of the four power distribution utilities of Andhra Pradesh and Telangana, has pointed out that high power purchase cost and continuation of the number of high payable (for power purchase) days during 2015-16 was one of the major concerns.
They have also been faulted for not filing tariff petition for 2017-18 within the specified time.
‘Implement UDAY’
All the four utilities have been suggested to rationalise the power purchase cost by going for more long term power purchase agreements (PPAs), to implement the Ujjwal Discom Assurance Yojana (UDAY) effectively to improve their balance sheets and also to bring down aggregate technical and commercial (AT&C) losses.
Rating of 41 power distribution utilities of 22 States was done by two agencies – ICRA and CARE – based on their performance indicators and the report was released recently.
The utilities of Arunachal Pradesh, Goa, Jammu & Kashmir, Mizoram, Nagaland, Odisha and Sikkim were not rated as part of the exercise.
Rating
The Eastern Power Distribution Company Ltd (EPDCL) of AP has been given the highest ranking of 11 among the four utilities of the two States with grading ‘A’ indicating that it’s “high operational”. The remaining three utilities, two of Telangana and one of AP, were given ‘B+’ grade by the rating agency.
According to the report, Southern PDCL of AP, Southern PDCL and Northern PDCL of Telangana have been given rankings of 15, 16 and 19, respectively, out of the total of 41.
The rating agencies have found that cost coverage ratio for most of the entities, 25 out of 41, was low at less than 0.90 due to substantial increase in expenses and non-cost reflective tariffs.
Some strengths
The rating agencies have analysed Southern PDCL of Telangana was among the six utilities in the country which have shown performance deterioration by over 10%.
However, the rating agency CARE has also listed some strengths of the four utilities including effective implementation of reform measures, timely receipt of tariff subsidy from the governments and others.
When contacted, officials of SPDCL of Telangana stated that the utility was on the road to recovery for the last few years with constant reduction of AT&C losses, improving receipts and implementing reforms to improve the performance.
