DISCOM Aggregate Losses Increased by 68% to ₹496.23 Billion in FY 2018-19_ PFC Report

The Power Finance Corporation Limited (PFC Limited) has released a report with key findings on the performance of state power utilities in the country for the financial year (FY) 2018-19.

According to PFC Limited, the report covers the performance of 104 state power utilities across the distribution, generation, transmission, and trading segments based on their audited and provisional annual statements.

It said that of these 104 utilities, 87 provided audited accounts, and 11 provided provisional accounts. For the remaining six utilities, PFC said it used information submitted by the establishments in tariff petitions.

The report showed that distribution utilities sold 957,509 million units (MU) of electricity in 2018‐19 up 7.45% from 891,109 MU in 2018‐19. Revenue from the sale of power (including tariff subsidy booked) rose 12.63% to ₹5.97 trillion (~$80.37 billion) during 2018-19, up from ₹5.30 trillion (~$71.35 billion) a year earlier.

Total revenue (including subsidy booked, regulatory income, revenue grants, and other income) for distribution utilities increased 12.80% to ₹6.73 billion (~$90.6 billion) in 2018‐19 from ₹5.97 billion (~$80.37 billion) in 2017‐18. Meanwhile, total expenditure increased ₹7.23 billion during the year, up 15.35% from ₹6.26 billion (~97.33 billion) in 2017‐18.

Aggregate losses during the year, however, increased 68% to ₹496.23 billion (~$6.68 billion) from ₹294.52 billion (~$3.97 billion) in the previous year, while their net worth remained negative at ₹805.67 billion (~$10.84 billion) as of March 31, 2019. Total borrowings increased to ₹4.78 trillion (~$64.35 billion) during as of March 31, 2019, up from ₹4.54 trillion (~$61.12 billion) a year earlier.

The report showed that generation utilities earned a profit of ₹29.65 billion (~399.17 billion) in 2018-19 compared to a loss of ₹8.61 billion (~$115.9 million) a year earlier. Their net worth rose to about ₹1 trillion (~$13.46 billion) as of March 31, 2019, up from ₹945.89 billion (~$12.73 billion) on March 31, 2018.

Transmission utilities also turned over a profit of ₹17.48 billion (~$235.3 million) in FY 2018-19, recovering from the previous year’s loss of ₹15.49 billion (~$208.5 million) and their net worth also jumped ₹74.47 billion (~$1 billion) during the year to ₹817.86 billion (~$11.01 billion) as on March 31, 2019.

Meanwhile, trading utilities pared losses slightly to ₹79.28 billion (~$1.06 billion) during FY 2018-19 from ₹81.9 billion (~$1.10 billion) a year prior. Their net worth stood at ₹398.48 billion (~$5.3 billion) as of March 31, 2019, up ₹110.01 billion (~$1.48 billion) from the previous year.

In its report, PFC said that overall, the aggregate losses of all state power utilities rose to ₹528.38 billion (~$7.11 billion) in FY 2018-19, noting that Karnataka, Maharashtra, Rajasthan, Gujarat, Delhi, Haryana, West Bengal, Chhattisgarh, Assam, and Tripura were the only profitable states during the year.

The cumulative net worth of all utilities in the country, however, rose to ₹1.37 trillion (~$18.44 billion) as of March 31, 2019, up from ₹1.10 trillion (~14.81 billion) the previous year. Total borrowings increased from ₹8.06 billion (~$108.5 million) as of the end of FY 2018-19 from ₹7.58 billion (~$102 million) a year earlier.

The report also noted that tariff subsidies booked rose to ₹1.10 trillion (~$14.81 billion) during the year in review from ₹930.61 billion (~$12.52 billion) a year earlier while the percentage of actual subsidies released by state governments slipped to 89.37% during the year, down from 95.55% in the previous year.

It highlighted that all states except Delhi (99%), Telangana (82%), Madhya Pradesh (81%), Karnataka (76%), Rajasthan (71%), Chhattisgarh (60%), and Andhra Pradesh (21%) had released the entire subsidy amounts booked to their respective distribution utilities during the year 2018‐19.

In May, Mercom reported that distribution companies owed renewable energy generators ₹68.37 billion (~$914.5 million) in outstanding payments spread across 307 pending invoices at the end of March 2020, according to data from the Ministry of Power’s payment ratification and analysis portal (PRAAPTI). This included dues of ₹311 million (~$4.2 million) under dispute.

DISCOMs have been a significant strain on the Indian power system. Their poor financial performance has been weighing down the entire sector with their inability to pay power generators on time, manage their losses, and iron out other inefficiencies.

Meanwhile, PFC recently announced the incorporation of five of its special purpose vehicles as wholly-owned subsidiaries of PFC Consulting Limited. A special purpose vehicle is a separate legal entity created by a company to achieve specific or temporary tasks and objectives while isolating the parent company from the risks involved. The five SPVs incorporated under the PFC’s subsidiary were Bhadla Sikar Transmission Limited, Sikar-II Aligarh Transmission Limited, Khetri-Narela Transmission Limited, Bikaner-II Bhiwadi Transco Limited, and Ananthapuram Kurnool Transmission Limited.