AT&C Losses Increased in Many States Under UDAY Program in 2017

The aggregate technical and commercial (AT&C) losses for the states and union territories under the Ujwal DISCOM Assurance Yojana (UDAY) program increased in the past one year, according to government data.

The UDAY program was launched by the Ministry of Power in November 2015 to target the debt reduction of DISCOMs. The increased losses of distribution companies are in stark contrast to the very objective of the program which is aimed at increasing the financial viability of the distribution companies (DISCOMs) in the country which are already reeling under the burden of debts.

According to the data provided by the government, as of December 2017, the AT&C losses in 24 of the UDAY states and union territories stood at 22.73 percent.

According to the UDAY portal, 24 states and union territories submitted their data pertaining to the performance of their DISCOMs.

The losses incurred by many of the participant states increased in the year 2017 when compared with the preceding year of 2016. In December 2016, these states reported cumulative AT&C losses of 20.3 percent; approximately 2 percent lower than the 22.73 percent AT&C losses reported in December 2017.

Given the target to curtail the AT&C losses to 15 percent by March 2019, the losses incurred in the past year seem way off the set goal. With the amount of losses incurred by various states in the past year, the realization of the set goal appears unlikely.

Out of the participant states, the DISCOMs of nine UDAY states and union territories underwent a huge spike in AT&C losses. These states are: Chhattisgarh, Punjab, Jharkhand, Uttarakhand, Uttar Pradesh, Madhya Pradesh, Puducherry, Maharashtra, and Tripura.

In Punjab, AT&C losses rose from 17.57 percent recorded in 2016 to 32.63 percent as of December 2017, signifying an aggregate loss of over 15 percent.

In the state of Chhattisgarh, the AT&C losses rose to 21.55 percent from 19.34 percent recorded in 2016.

In Jharkhand, the AT&C losses witnessed an almost 10 percent spike from 29.9 percent in the year 2016 to 39.27 percent by December 2017.

In the state of Uttarakhand, the losses rose from 14.02 percent in December 2016 to 26.61 percent in a year’s time.

The DISCOMs in the state of Uttar Pradesh witnessed a marginal spike in losses, which was merely over one percent from 30.21 percent (2016 December) to 31.43 percent (2017 December).

The north-eastern state of Tripura reported AT&C loss of 21.4 percent, up from 16.61 percent recorded in the year 2016.

Madhya Pradesh reported AT&C loss of 31.79 percent in the year 2017, up from 24.9 percent in the previous year.

Puducherry reported an increase of almost 4 percent in AT&C loss levels, rising from 18.98 percent recorded in 2016 to 22.56 percent in December 2017.

The state of Maharashtra too reported an increase of about 4 percent in AT&C losses, from 18.88 percent (2016 December) to 22.79 percent (2017 December).

The DISCOMs in Bihar, Meghalaya, and Manipur reported AT&C loss levels of more than 30 percent.

In May 2017, Mercom had reported that four Gujarat state power distribution utilities emerged as top performers per Integrated Rating for State Power Distribution Utilities report by the Ministry of Power. At that time, of the rated 41 DISCOMs, 26 showed an improvement in their AT&C loss levels compared to the previous year. Twelve DISCOMs got their AT&C loss levels below 15 percent during 2016 as compared to 10 DISCOMs during 2015.

The current level of AT&C losses incurred by the distribution companies is a matter of concern. Compared to the progress made in the year 2016, 2017 has been not up to expectations even after the DISCOMs in states that joined the UDAY program have cut down their financial losses from ₹515.9 billion (~$8.14 billion) in the Financial Year (FY) 2016 to ₹348.3 billion (~$5.49 billion) in 2017.

Mercom had previously reported that with the joining of Nagaland and the union territories of Andaman & Nicobar Islands, Dadra & Nagar Haveli, and Daman & Diu, the number of UDAY signatories has reached 31 (27 states and 4 union territories).

“Considering we are going into an election year, it is unlikely that there will be an improvement in the AT&C and other revenue losses. Electricity is typically used as an election giveaway by states without concern for revenue collections,” said Raj Prabhu, CEO of Mercom Capital Group.