₹700 billion, from ₹1.3 trillion in June 2022, when LPS was launched. “We expect receivable days for Fitch-rated gencos to further shorten in the near term, although at a slower rate than the sharp improvement in FY23," it said.
The long-term sustainability of gencos’ better receivables position depends on structural changes to boost the operational and financial profiles of discoms, Fitch said adding that it includes timely and adequate tariff adjustments, state subsidies and greater operational efficiency. The central government’s Revamped Distribution Sector Scheme (RDSS), together with restricted access to the short-term exchange-traded power market in case dues to gencos are delayed under the LPS, should help, but implementation risk remains.
“We believe improved billing and revenue collection from the installation of prepaid smart-metres under the results-linked RDSS could reduce losses at discoms, which reached ₹590 billion in FY22. The scheme provides financial support to install 250 million smart metres by FY26, with 210 million smart metres approved and 2 million installed across India by mid-September 2023,“ it said.
The RDSS will also facilitate the upgrade of distribution infrastructure to accommodate rising power demand and reduce technical losses. The scheme will outlay ₹3 trillion in FY22-FY26 to cut aggregate technical and commercial losses to 12%-15% and aims to bridge the gap between the average cost of power supply for discoms and the average revenue realized by 2025, among other items.
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