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Sustained energy demand recovery is still absent, says ICRA

While out of the remaining 16 states, 9 states have issued tariff orders post March 2017

Press Trust of India  |  New Delhi 

Sustained energy demand recovery absent, says ICRA

A demand recovery is still absent and the stressed are sizeable at about 60 GW, credit rating firm said today.

The recent uptrend in the electricity demand growth has led to a marginal improvement in the all thermal PLF (plant load factor or capacity utilisation) to 59.9 per cent for the first five months of 2017-18 as against 59 per cent in the April-August period of last fiscal, said.


The has recently launched Saubhagya Scheme with a thrust on rural electrification, which will improve an energy demand in the near to medium term in ICRAs view, if the scheme is implemented in a timely manner.

It said in a statement that a sustained demand recovery, however, is still absent and thus energy demand growth from the relatively high tariff paying industrial and commercial segments remain critical for both the state distribution utilities and IPPs.

Also, it added, the stressed thermal capacity (in private IPP (independent power producers) segment remains sizeable at about 60 GW, despite the various policy level initiatives undertaken by the

This affected thermal capacity is due to several issues such as lack of long-term (LT) power purchase agreements (PPAs), non-availability of domestic gas and unviable tariffs in the PPAs (power purchase agreements) due to capital cost escalation and fuel pricing issues for imported coal, said.

"Among this, affected capacity due to lack of LT PPA remains quite significant and estimated at about 25 GW," said Girishkumar Kadam, Sector Head & Vice President, Ltd.

Further, on the distribution front, the issuance of tariff orders by the State Electricity Regulatory Commissions (SERCs) for 2017-18 have been delayed in a number of states, with only 12 states issuing tariff orders as per timelines (i.e. by March 31, 2017), it said.

While out of the remaining 16 states, 9 states have issued tariff orders post March 2017 and they are yet to be issued in 7 states.

This apart, the extent of average tariff hike, based on the tariff orders issued in 21 states is at a modest 4 per cent which also differs from the tariff hike proposed under the UDAY MoUs in some of the key states.

With respect to progress on implementation of UDAY (meant for revival of debt laden discoms), the liquidity profile of the discoms has improved to some extent for utilities with stretched financial position post refinancing and part takeover of the debt by the respective state governments.

However, the improvement on the operating efficiency front continues to remain slow with AT&C loss level for utilities in many of the key states like Haryana, Punjab, Rajasthan and Uttar Pradesh being much higher than the targeted loss level agreed in the UDAY MoUs," Kadam added.

First Published: Tue, October 03 2017. 15:35 IST
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