The rating agency ICRA in its latest report has said that delay in tariff petition filings coupled with inadequate tariff revision proposals are likely to remain an area of concern for distribution companies (Discoms) in the financial year 2020. It noted that Discoms have already managed to reduce its losses and debt levels significantly under the Ujwal DISCOM Assurance Yojana (UDAY) scheme.
According to the report, state distribution utilities in 17 of the 29 states have filed tariff petitions for FY20, reflecting less-than-satisfactory progress. It pointed out that the delay in filling of tariff petitions by the Discoms is a deviation from terms of the UDAY scheme, wherein they were required to file the plans in a timely manner so that the State Electricity Regulatory Commissions (SERCs) would issue the tariffs orders by March end. It further noted that tariff hikes proposed and approved for the past 2-3 years have remained lower than what was agreed under the UDAY, leading to persistent gap between average tariff and average cost of supply, though reducing from earlier years.
As per statistics, the median tariff revision on an all India basis has reduced from 8 percent for FY15 to 4 percent for FY16 and FY17 and further to 3 percent and 1 percent for FY18 and FY19, respectively and it is likely to remain at similar levels for FY20.