The debt-laden state electricity boards' accumulated losses have widened by 58% to a whopping Rs 3 lakh crore in the two years to March 31, 2014, Icra said in a report.
The government had designed a financial restructuring plan (FRP) in FY 13 for these entities when their accumulated losses stood at R1.9 lakh crore. SEBs/discoms in Uttar Pradesh, Tamil Nadu, Rajasthan, Haryana, Bihar, Jharkhand, Andhra Pradesh and Telangana that accounted for over 70% of the losses then, signed up for the FRP in September 2012.
The continuing rise in SEBs' losses is primarily due to their failure in implementing timely tariff revisions, although this is mandated under FRP. For the current fiscal, the state electricity regulatory commissions (SERCs) of 20 states have issued tariff orders but the states that are part of FRP have suffered delays of 6-11 months in tariff determination, Icra said. It added that the tariff orders for FY 16 were also pending in states such as Tamil Nadu and Rajasthan amongst others.
"The extent of average tariff hike based on tariff orders issued by SERCs across these states (part of FRP) continues to remain limited at 5%, as against 9% and 7% for for the previous two fiscal years respectively," Icra said.
Inadequate and delayed tariff revision have also resulted in ballooning of the regulatory assets, estimated at R84,000 crore, for discoms in three states mainly Rajasthan, Tamil Nadu and Uttar Pradesh, Icra added.
Source- Financial Express