Dismissing the report about power distribution companies (discoms) having suffered losses of Rs 90,000 crore in 2020-21, the Union Ministry of Power on Wednesday said it was a grossly inflated figure.
As per the audited annual accounts of Power Distribution Utilities, AT & C losses have come down from 23.5% in FY 2016-17 to 21.83% in FY 2019-20. The annual profit after tax (PAT) figures, being negative, have also shown improvement from Rs 33,894 crore (loss) in 2016-17 to Rs 32,898 crore (loss) in 2019-20, the Ministry said.
There was a report published by rating agency ICRA on the power distribution sector in March 2021 which pointed to speculations regarding discoms achieving loss levels of Rs 90,000 crore in 2020-21, the power ministry said in a statement.
While this report indicates profit after tax (PAT) figures of negative Rs 50,000 crore (loss) for 2018-19, which is consistent with the PFC's annual utilities report of FY19. The projections of PAT figures of 2019-20 are shown to increase to the tune of negative Rs 60,000 crore, it stated.
This report further builds on these losses and projects total discom losses of Rs 90,000 crore in 2020-21, it further said.
One of the reasons ascribed to this speculation is the decline in electricity volume sales in the year 2020-21 due to the Covid-19-induced lockdown, the ministry said.
This report also mentions a Rs 30,000 crore increase in discom dues to its creditors from March 2020 to December 2020. It perhaps assumes this increase in payables, which is essentially a cash flow problem, to directly reflect into additional discoms losses in 2020-21 over the projections of 2019-20, the ministry said.
"As a result of the above erroneous projections by ICRA, the loss figures of Rs 90,000 crore for FY2021 seem to be grossly inflated," the ministry said.
The Ministry also said the measures already taken by the government would further incentivise the discoms to reform, perform, and transform in an efficient and cost-effective manner, it said.
The Government of India has been taking significant steps to improve the operational efficiencies and financial viability of discoms, the ministry added.