Gujarat again leads in power discom ratings, Jharkhand comes last

The four Gujarat state power distribution utilities have for a third year in a row emerged as top performers in the country.

Punjab is in the same top ‘A+’ bracket as Gujarat, with the utilities of Maharashtra and Uttarakhand closely following with an ‘A’ rating.

According to the ‘Integrated rating for state power distribution utilities’ done by the ministry of power, 10 of these got a rating of 'B+' and 13 were rated 'B'. Eight got ‘C+’ and two – Jharkhand State Electricity Board and Dakshinanchal Vidyut Vitran Nigam in UP — got the lowest, a ‘C’ rating.

The methodology for this rating was developed by the ministry in 2012. It covers 40 state utilities and no private ones. The Central Electricity Authority, Central Electricity Regulatory Commission, Power Finance Corporation, Rural Electrification Corporation, distribution utilities and credit rating agencies CRISIL, ICRA and CARE are involved in the exercise.

The methodology is given final shape in consultation with the department of financial services (ministry of finance), Indian Banks' Association and major public sector banks.

Financial performance has a weightage of 60 per cent. This covers subsidy, cost coverage ratio, aggregate technical and commercial (AT&C) losses, financial planning and the likes. Efficient regulatory practices hold the second best weightage of 15 per cent.

The report noted the absolute subsidy dependence for most states remained high, mostly due to the subsidised nature of rates, particularly for agricultural consumers.

“Cost coverage ratio for most utilities (33 of the 40 rated) remained low due to substantial increase in expenses and non-cost reflective tariffs (rates). Gujarat was the best performer on cost coverages. Five power distribution utilities have shown more than 15 per cent improvement in this parameter. The two distribution utilities of Bihar have deteriorated more than 10 per cent in their cost coverage,” said the report, reviewed by Business Standard.

Among the major findings, AT&C losses for a few utilities have deteriorated due to increased rural supply. Regulatory clarity is gradually appearing, with state electricity regulatory commissions in place across all states covered by ICRA and CARE, said the report.

This year the rating announcement was not open for media coverage. During the UPA stint, the event was cancelled at the last moment by then power minister Jyotiraditya Scindia, who introduced this scheme. Narendra Modi ruled Gujarat state utilities got top ratings then as well.