Discoms to get credit ratings from April 1
New Delhi, Feb 8 : Electricity distribution companies (discoms) in India's states would get credit ratings from April 1, Minister of State for Power Jyotiraditya Scindia said Friday.
"CARE (CARE Ratings) and ICRA (Investment Information and Credit Rating Agency of India) have been given charge to give the ratings," Scindia told media persons here after a meeting with banks and financial institutions to discuss financial issues of the power sector.
Ratings are a guideline for lenders of discoms to assess their financial risks, particularly in a context where the power sector is beset with problems of fuel availability for generation and other bottlenecks like clearance for mining projects that is affecting domestic coal production.
Regarding a key aspect of discoms' financial health, Scindia underlined the need for regular power tariff revisions.
"Regular tariff revision is essential not just to ease lending, but to boost private sector investment," he said.
The government in September last year approved a restructuring package for discoms' debt burden, which stood at a staggering Rs.246,000 crore at end of March 2012.
Under the scheme, 50 percent of the short-term outstanding liabilities would be taken over by state governments, and the balance would be restructured by providing moratorium on principal and best possible terms for repayments.
Five states - Tamil Nadu, Andhra Pradesh, Rajasthan, Haryana and Uttar Pradesh - have committed to the financial restructuring programme (FRP) for discoms.
"Five states are already on board (the FRP). Their total short-term liability is close to Rs.120,000 crore. We are speaking to the finance ministry for the approvals so that in the near future, next week, we'll be able to take it forward," Scindia said after the meeting of state power ministers here Tuesday.