Discoms' projected Rs 90,000 cr loss 'grossly inflated': Power ministry

The losses of discoms have come down from Rs 33,894 crore in FY17 to Rs 32,898 crore in FY20, the ministry said.
The ministry of power in a statement said the projections on the financial loss of state owned power distribution companies (discoms), is erroneous and inflated. A recent report of Niti Ayog, citing a March dated analysis of ICRA Rating agency said discoms losses would increase to Rs 90,000 crore in FY21.

The ministry of power said this loss figure cited is “grossly inflated".

ICRA in March in an analysis had indicated that discom losses will increase to Rs 90,000 crore in FY21, under a particular scenario. The rating agency had mentioned that net losses at PBT/PAT levels for FY2020 was about Rs 56,000 crore. It further said, in FY2021, revenue gap for discoms would increase by Rs 30,000 crore "owing to the decline in electricity demand from the high paying commercial & industrial customers given the adverse impact of Covid-19."

A report co-authored by NITI Aayog and energy think tank RMI released in early August estimated the same loss estimates for discoms.   

"The facts are quite to the contrary. It is discernible that the actual PAT figure for FY2020 is almost half of the negative Rs 60,000 crores projected by ICRA for FY2020, thereby indicating that the ICRA estimations of even FY2020 are significantly flawed. ICRA has further built up the losses for FY 2021 on their erroneously estimated figures of FY 2020 by adding another Rs 30,000 crores due to Covid for reasons mentioned above. No details have been given in the report to cover this increase," ministry said in its statement. 

The losses of discoms have come down from Rs 33,894 crore in FY17 to Rs 32,898 crore in FY20, the ministry said. The losses had surged to Rs 49,623 crore in FY19.

Responding to the ministry, ICRA said, nowhere in their report they have mentioned discoms losses to the tune of Rs 90,000 crore. "One of the exhibits in the report merely estimates what would be the gap without considering the impact of regulatory asset booking by the discoms." 

Ministry of power also said the adverse performance of discoms across the country already seem to have gone past the inflexion point, and are showing green shoots of turnaround.

The ministry further said, under the current Regulatory system of electricity tariff determination, a mechanism of true-up’s already exists that would allow the recoveries of losses to be covered through tariffs in the subsequent year.

ICRA added in its response, their report also states that the discoms would be able to claim such revenue loss as a basis for future revenue and tariff determination under the cost-plus tariff principles from the regulators. 

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