Govt to give ratings to state-run power cos

Power Ministry may award ratings to state-run distribution utilities on the lines of CRISIL and ICRA, which would enable lending agencies to evaluate their performances and grant them loans accordingly.

"At present, all the utilities are treated on a par, the proposal is to rate the state utilities in terms of their performances," a Power Ministry official told PTI.

He said, "Lending agencies like REC (Rural Electrification Corp) and PFC (Power Finance Corp) would use these ratings for evaluating the power utilities."

The ratings would be based on certain parameters to be set up by the ministry. They may include -- efforts made by these utilities towards reducing Aggregate Technical and Commercial (AT&C) losses in power distribution, maintenance of their accounts, inclusion of independent directors on board etc.

"The Ministry wants to bring all the audited accounts to be as latest as possible. If the utility is selling power at a lesser price, the ministry should try and compensate," he said, adding that for the utilities that are doing well in terms of higher ratings, the finances should be made available to them at a cheaper rate.

In its attempt to extract performance from these companies, Power Ministry is mulling innovative options.

"This exercise is to put pressure on the utilities... To get their accounts updated," said the official.

The Ministry may also ask Planning Commission to use these ratings while allocating the discretionary quota of funds. Discretionary quota of funds are the funds or finances with the Centre that it gives to the states.

Meanwhile, Power Ministry has floated a cabinet note for establishing a Rs 1 lakh crore National Electricity Fund to reduce transmission and distribution losses of state-run utilities by providing subsidy to electricity distribution companies.

NEF, with a likely corpus of Rs 1,00,000 crore, would be like an internal subsidy scheme for power distribution utilities. It would also be used towards building new infrastructure capacity like electricity transmission lines, transformers, replacing overloaded lines etc.