MOSL: UTILITIES-The Prevailing ‘Discom’fort; UP DISCOMs – cash losses of ~USD2b in three years
Utilities: The Prevailing ‘Discom’fort; UP DISCOMs – cash losses of ~USD2b in three years
- Uttar Pradesh (UP) has been a critical cog of India's power demand growth, accounting for ~15% of the country's population and ~9% of its electricity demand (third largest).
- We, however, note that UP DISCOMs continue incurring huge losses, despite the heightened focus on operating efficiencies and the restructuring of debt (~INR500b) under the UDAY scheme.
- In the three years up to FY18, UP DISCOMs incurred cash losses of ~INR142b (~USD2b). At the operational level too, they have barely managed to break even.
- There is no respite as yet, with these DISCOMs expected to incur cash losses of ~INR24b in FY19. Although this implies a reduction from INR52b in FY18, we note that it is purely due to higher subsidy support from the government (annual tariff order for FY20 yet to be filed).
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