Subsidy dependence up 7-8% for discoms in FY18: ICRA

Rating agency ICRA today said overall subsidy dependence of power distribution companies (discom) is estimated to increase by 7-8 per cent to Rs 81,000 crore this fiscal.

"The overall subsidy requirement is further estimated to constitute around 17-18 per cent of the revenue requirement approved/estimated for the utilities for FY'2018," ICRA said in a statement.

Punjab and Madhya Pradesh are likely to witness a sharp increase in subsidy support, of 29 per cent and 49 per cent respectively, this fiscal, which further implies a relatively higher dependence on subsidy support to meet their revenue gap, the statement said.

"The increase in the subsidy requirement for FY'2018 over the previous year is predominantly driven by first, the subsidy and concessional tariff announcements in states during the pre-election period and/or continuation of subsidised nature of power tariff by state governments for certain consumer categories, even in case of upward revision in tariff by State Electricity Regulatory Commission (SERCs).

"The increase also depends on the estimated higher level of consumption by the subsidised consumer categories," says Sabyasachi Majumdar, Group Head & Senior Vice President, ICRA Ratings in the statement.

The dependence on subsidy support for discoms in other states such as Andhra Pradesh, Bihar, Gujarat, Karnataka, Haryana, Rajasthan, Tamil Nadu and Telangana continues to be significant, ranging between 11-29 per cent of the overall revenue requirement across the states.

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)