Delhi tops power sector rating

Nearly two years after the Shiela Dikshit Government took the “bold step” of reforming the power sector and handing over the task of distribution of electricity to private players, Delhi has been ranked first in performance rating among all the States. The rating has been done by ICRA and CRISIL on behalf of the Union Power Ministry.

Delhi has not only replaced Andhra Pradesh — ranked first in the earlier rating — but also left important States like Karnataka, Haryana, Rajasthan and Maharastra far behind to occupy the top slot among 28 States. Of a maximum of 100 marks, Delhi got 57 followed by Andhra Pradesh (56.75), Goa (52.20), Karnataka (51.25), Gujarat (50.99) and Haryana (49.63). Previously Delhi ranked sixth in this rating.

As per the “Power Sector Rating: Consolidated Report” submitted jointly by ICRA and CRISIL, the extraordinary performance of the Capital in the power sector has been mainly due to the various policy decisions taken by the Delhi Government and timely release and implementation of tariff orders and other regulations by the Delhi Electricity Regulatory Commission. In both these parameters, Delhi has not only topped the list but also scored over 80 per cent.

However, when it comes to the crucial issue of generation, transmission and distribution of electricity in the Capital, Delhi seems to be lagging behind. Delhi has been placed 19th when it comes to generation. Even though privatisation was carried out nearly two years ago, Delhi has been ranked seventh in transmission and distribution after Kerala, Andhra Pradesh, Himachal Pradesh, Goa, Tamil Nadu and Gujarat. Significantly, in the important Aggregate Technical and Commercial (ATC), Delhi has been given zero marks. At the same time, the fact that Delhi was previously ranked 13th indicates signs of improvement in this parameter.

The rating agencies in their report said though the Delhi Government has been providing “loans instead of subsidies” to the utilities to cover the revenue gap, it was being viewed favourably as it was a `step closer’ towards running utilities on commercial lines. It also felt the need to reduce the revenue gap by increasing tariffs and cost rationalisation. The report appreciated the directives issued by the DERC to the various power utilities so as to improve the functioning of the power sector in the State in terms of operational efficiency, cost and quality of service.

The report observed that the commercial viability of the privately managed discoms was contingent upon improvements in the low level of metering billing (54.5 per cent of units input in the system), reduction in ATC losses of 52.8 per cent and improvements in the distribution infrastructure. It said the discoms were making cash profits because the cost of power was either being adjusted or subsidised by the Delhi Transco to cover their costs and present return rate.

Pointing out that the net accumulated losses of Delhi Transco was Rs. 1,179.09 crores, the report said that this coupled with a low cost coverage ratio of as much as 53 per cent only reflected “unfavourably” on the financial health of the power utilities. It recommended an increase in tariff, better-cost management and improving network parameters so as to reduce the financial gap. It placed commercial viability of privatised discoms an important part of the power sector performance in Delhi.

However, the rating agencies warned the Delhi Government to closely monitor the “high accumulated losses” and the “low cost coverage ratio” as these would badly affect the financial heath of the power sector.