TN power co shocks continue: In efficiency, ranks 39 among 41 discoms
From B to C+ to C, Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) is in a downward spiral.
The rating of Tangedco has declined from C+ to C in the Ninth Annual Integrated Rating, released by Union Power Minister RK Singh recently. Not long ago, it had a ‘B’ rating.
And quite shockingly, Tangedco has been ranked 39 among 41 discoms (power companies or boards) rated.
The Ministry of Power had formulated an Integrated Rating Methodology in July 2012 for evaluating performance of state power distribution utilities. A+ grade goes to discoms with scores between 80 and 100 [high operational and financial performance capability].
There are five discoms with A+ grade, four from Gujarat and one from Haryana while there are three Discoms with A grade —Punjab, Maharashtra and Haryana — with scores between 65 and 80.
There are 10 discoms with B+ grades. Boards with scores between 20 and 50 are given B and C+ grades and there 15 discoms with these poor grades.
The last grade is C with “very low operational and financial performance capability” with scores between 0 and 20. Tangedco and seven other boards are in this bracket.
Also read: Tangedco fails to make smart switch, loses revenue
So what are the immediate consequences of Tangedco going down the list? Finance companies might refuse to provide loans. Even if they do, firms might offer loans with higher interest which will further bleed Tangedco’s coffers.
On multiple counts, Tangedco is slipping.
“Adverse opinion provided on the accounts [for the financial year 2020] by independent auditor, slippages in regulatory timelines on filing tariff petitions, high financial risk profile on a standalone basis arising from cash losses, poor capital structure and debt protection measures. Overall loss remains at ₹58,156 crore, debt stands at ₹1,08,338 crore as on March 31, 2020, high power purchase cost and high payable days are the main concerns for Tangedco,” the rating said.
What the rating agency wants Tangedco to do
- Must remove deficiency in audited accounts
- Better billing efficiency
- Draw up long-term plans to achieve financial turnaround
- Reduce power purchase cost
- Reduce dependence government subsidy
