India Ratings revises WBPDCL rating outlook to negative

Non-revision of power tariff by state utility West Bengal State Electricity Distribution Company Limited (WBSEDCL) had its ripple effect on state power generating company WBPDCL, which was downgraded in its "rating outlook".

India Ratings (Ind-Ra) has revised the outlook on the West Bengal Power Development Corporation Limited (WBPDCL) to "negative" from "stable" while affirming its long-term issuer rating at IND BBB.

"The negative outlook reflects an increase in WBPDCLs receivables to Rs 35.6 billion in Q1FY'20 (FY19 Rs 28.9 billion, FY18 Rs 23.3 billion), leading to tightening of liquidity," Ind-Ra said in its rating note.

"The increase in receivables was attributed to delays in payment from its sole off-taker West Bengal State Electricity Distribution Company Limited (WBSEDCL)," it said.

WBSEDCL has not seen a tariff revision since October 2016 and its annual performance review has been pending since FY14.

However, WBSEDCLs power purchase cost has increased over FY17-FY19, resulting in an increase in regulatory assets to Rs 127 billion in FY19 (FY18: Rs 119 billion).

The debtors pending true up rose to INR37.6 billion in FY18 (FY17: INR28 billion) due to commencement of operations at Sagardighi units 3 and 4, for which tariff orders are pending, the agency said.

The West Bengal government provides grants to WBPDCL for capex, regulatory assets, loans for working capital and guarantees for raising term loans.

"While WBPDCL has not received any fresh regulatory grant for working capital requirement during FY19, the tangible support has increased by Rs 4 billion short-term loans from the GoWB in FY19," Ind-Ra said.