NEW DELHI : India Ratings on Thursday said that weak financials of power distribution companies reflected in their increasing overdue even after liquidity injections by the government.
The weak financial situation may pose a risk to the overall power demand in the country, it said in a statement.
Maintaining a neutral outlook for the power sector for FY23, the rating agency said that the overall plant load factor (PLF) of thermal power plants would continue to improve and reach closer to 60% in FY23.
PLF refers to the ratio of average power generated by the plant to the maximum power that could have been generated in a given time.
“The weak financial profile of discoms, reflected in increasing overdue even after liquidity injections by the government of India, is likely to keep power producers’ debtors elevated and may pose a risk to the overall demand," the agency added.
The government assistance of ₹3.05 trillion for improving discoms infrastructure including smart metering and upgradation of systems should result in reduction in aggregate, technical and commercial losses, although implementation remains key for discoms as observed in the past, it further added.
Furthermore, a lower-than-expected addition in FY23 in renewables would aid the PLF recovery. The impact of the third covid wave remains lower on power demand, given the less stringent curbs imposed by state governments.
Ind-Ra believes that the energy transition in terms of increasing generation from renewable sources would continue and increase by 125-150bp annually till FY25.
