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New restructuring package for state discoms a positive: Fitch

Terming the new restructuring package offered to state discoms as a positive, Fitch today said states opting for the package and delivering on loss reductions over the medium-term is essential for the success of the programme.

New restructuring package for state discoms a positive: Fitch

New Delhi: Terming the new restructuring package offered to state discoms as a positive, Fitch today said states opting for the package and delivering on loss reductions over the medium-term is essential for the success of the programme.

"The agency sees the new restructuring package offered to the state discoms in November 2015 as a positive," the rating agency said in a statement.

Successfully addressing the weak financial positions of state distribution companies (discoms) is key to improving the health of India's power sector, it added.

The weak fiscal position of these entities has led to sustained delays in payment to market participants and weak offtake from power generators, in addition to increasing the risks associated with much-needed investment in the sector, it further said.

Fitch said it forecasts substantial capex to continue in 2016 for the rated utilities in India, weighing on their financial profiles.

However, it maintains a stable outlook on the utilities sector and ratings of Indian discoms in 2016, it added.

In a bid to rescue almost bankrupt state electricity retailers, the Cabinet had earlier this month approved a scheme for rejig of Rs 4.3 lakh crore debt of the utilities besides measures to cut power thefts and align consumer tariff with cost of generating electricity.

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