In a shot in the arm for the Tamil Nadu Generation and Distribution Corporation (Tangedco), the Fifth Annual Integrated Rating, 2017, of State Distribution Utilities has upped the discom’s performance from 'C' (low performance) last year to 'B' (below average). The report, however, does flag serious concerns about the health of the discom, including the growing subsidy support from the Tamil Nadu government.
M. Saikumar, Chairman and Managing Director, Tangedco, said he was happy the discom has made an improvement from ‘C’ last year to ‘B’ this year and was hopeful of achieving ‘A’ grade next year.
The rating done by the ICRA and Credit Analysis and Research under the auspices of the Ministry of Power has positioned Tangedco in the 25th place all-India, up from 34th last year. The rating was carried out among 41 electricity distribution companies covering 22 States.
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The annual grading exercise is being carried out to assess the financial and operational strength of the discoms to help give a true picture to lending institutions and other stakeholders. The rating covering several parameters including Aggregate Technical & Commercial (AT&C) losses, power purchase, cost efficiency, cost coverage ratio and regulatory compliance grades discoms based on the marks scored under each parameter. Tangedco has been graded as being in the 35 to 50 range. Tangedco officials point out that the ‘B’ grade reflects 2015-16 financial results that showed a total loss of ₹ 5,787 crore. “But in this financial year (2016-17) we have reduced the total losses to ₹3,700 crore and so there will be marked improvement in the grading next year,” said an official.
The report, however, does express serious concerns about Tangedco's financial and operational health, and prescribes actions that would need to be taken to strengthen the discom. The report highlights Tangedco’s moderately-high Aggregate Technical and Commercial (AT&C) loss levels, billing of consumers of only 80% (excluding agricultural connections), and failure to file tariff petitions periodically – Tangedco has got exemption from filing them under the Uday scheme.
The report also mentions the high dependence on State government subsidy which stands at ₹6,879.33 crore for 2015-16, as against ₹952.16 crore in 2004-05. In 2014-15 the subsidy was ₹ 5,599.64 crore.
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Regarding the issue of AT&C losses which carries a weightage of a maximum of 28 points, Tangedco fares poorly, pegging the losses at 20.13% in 2015-16 in the Adjusted Revenue Requirement (ARR) filed with the TNERC. A senior official, however, claimed AT&C losses had reduced to 14.50 % as per UDAY data.