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Outstanding dues of state utilities payable to central generating power stations have increased 16% in the last one year, touching Rs 22,200 crore.
This is despite about 18 states agreeing to join Ujwal Discom Assurance Yojana (UDAY) and eight states issuing bonds of about Rs 1 lakh crore recently.
UDAY was launched last year for financial and operational turnaround of state-owned power distribution companies.
The scheme aims to reduce interest burden, cut cost of power, reduce power losses in distribution sector and improve operational efficiency of utilities.
Rajasthan, which had issued the largest quantum of bonds under UDAY at Rs 37,350 crore, reported only a marginal year-on-year fall of Rs 81 crore in its dues to central stations at Rs 1,128 crore as of March end.
Uttar Pradesh, the second largest bond issuer at aboutRs 24,330 crore, saw its power dues treble to Rs 2,672 crore fromRs 841 crore during the same period. Haryana had raisedRs 17,000 crore through a bond issue, but reported flat outstanding at Rs 65 crore.
Power sector analysts are not raising any red flag yet. "We need to give the power utilities at least two more year before we start to draw any conclusion. It is too early to draw any conclusion from the increased outstanding," said Arvind Mahajan, head of infrastructure and government services at KPMG. "We also need to see when these states joined UDAY.
Some have joined recently and there has been no effect of the bonds of their finances and dues as yet," he said.
An analyst with a large rating firm said state utilities may not have used all the money received from bond issues to pay off dues of central generating stations. "It may have been used to pay off short-term debts and close high-cost loans which have been affecting the financial positions of these utilities adversely," the person said.
Sabyasachi Majumdar, senior vice-president at ICRA Ratings, pointed out that there has been a rise in the demand for power in the last one year in tandem with a rise in overall generating capacity.
"It is likely that the total dues would rise as utilities buy more power from generators," he said.
"The effects of UDAY will start to reflect on the outstanding and balance sheets of utilities only after March 2017. We need to give these power distribution companies an additional year to see any sizeable effect on their financial position," Majumdar said.
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