Five out of the 41 state government-owned power distribution companies have scored the best “A+” rating, as per the “9th Annual Integrated Rating of State Power Distribution Utilities”.
This report, coordinated by Power Finance Corporation (PFC) with the participation of state power discoms, was released by the Union Power Minister, R.K. Singh, on July 16, 2021. The discoms were rated on the basis of their performance in FY20 (April 1, 2019 to March 31, 2020).
Here are some key findings of the report:
- Five out of the 41 discoms under study secured the highest possible “A+” grade with an overall score of between 80 and 100 (on a scale of 100). [See table]
- The “A+” grade indicates “very high operational and financial performance capability”
The modal class was “B+” with the highest number of discoms, at ten, scoring this grade. This grade indicates moderate operational and financial performance capability.
- Seventeen or around 41 per cent of the discoms surveyed had either low or very low operational and financial performance capability, scoring either “C+” or “C”.
- All the four state discoms of Gujarat secured “A+” grade. The only other discom to score this maximum grade was Dakshin Haryana Bijli Vitran Nigam Ltd. The only other state discom in Haryana, Uttar Haryana Bijli Vitran Nigam Ltd, earned “A” grade.
- The lone state discoms of Punjab and Maharashtra—Punjab State Power Corporation Ltd and Maharashtra State Electricity Distribution Company Ltd, respectively—also secured “A” grade.
- Karnataka has the maximum number of state discoms, standing at five. While four of these scored “B+”, the fifth scored “B”.
- Among the eight discoms at the bottom of the table (with grade “C”) were two discoms of Rajasthan, one of Andhra Pradesh and the lone discom of the states of Meghalaya, Manipur, Tripura, Jharkhand and Tamil Nadu.
- Uttar Gujarat Vij Company Ltd (UGVCL), the best-rated discom, had satisfactory AT&C losses of 6.88 per cent in FY20. Among key concerns included in the rating report was: “absolute subsidy dependence for the state remains high, given the subsidized nature of tariff particularly towards agricultural consumers.”
Rating Methodology
Broadly, operational and reform parameters had 43 per cent weight in the overall score of discoms. External parameters (including government support) accounted for 15 per cent. Financial parameters constituted the remaining 42 per cent of the overall weight.
Also read: PFC Registers Strong Performance In FY20
Background
Ministry of Power had formulated an Integrated Rating Methodology in July 2012 for evaluating performance of state power discoms on a range of parameters covering operational, financial, regulatory and reform parameters. The rating exercise is carried out on annual basis and presently covers 41 state distribution utilities spread across 22 states. State power/energy departments and private discoms are however not covered under the integrated rating exercise.
ICRA and CARE are the designated credit rating agencies and have been assigned 21 and 20 utilities respectively. MoP has mandated Power Finance Corporation (PFC) to co-ordinate the rating exercise.
So far, nine integrated rating exercises covering FY12, FY3, FY4, FY15, FY6, FY17, FY8, FY19 and FY20 — the latest being the subject of this story — have been completed. The immediately preceding 8th integrated ratings were released on December 9, 2020.
