Retail film sales gap widens to 88,720 crore in June

NEW DELHI: Assets under management – generally tariff losses recorded as accounts receivable – of distribution companies (discoms) have accumulated cumulatively to Rs 88,720 crore As of June 30, available government data shows, underscoring the fact that the financial woes of utilities go deeper than the unpaid fees of state governments.
Industry players say this is just the tip of the iceberg as government data records the amount recognized by state regulators. Actual amounts may exceed Rs 1 lakh crore as claims are bound by legal bottlenecks at the appellate level or in higher courts. For example, according to government data, the customs authority of Delhi has recognized regulatory assets of Rs 8,954 crore for three business outlets operating in the national capital. But executives said the assets would be significantly higher if the appellate body and court orders were supplemented.
Regulatory assets are created when state regulators accept that tariffs do not cover the costs of procuring corporate electricity but do not increase the rate to desired levels, mainly under pressure from the government. state power to designate them. The revenue gap between procurement and power supply costs, which widen due to system inefficiencies, is then classified as an asset under management.
These things make discom books look good on paper. But in reality, a Niti Ayog-Rocky Mountain Institute India report last year said, “assets under management create cash flow problems for trading companies, forcing them to take out loans to compensate. revenue deficit. The additional loan, along with interest, adds to the burden of discoms.”
Consumers also pay a price because regulators often allow a surcharge to be levied in an effort to compensate for their failure to allow tariffs to reflect costs under political pressure.
Regulated property is part of the “freebie culture” – which also includes non-payment of benefits on time and unpaid bills by government agencies, amounting to Rs 1.39 lakh crore as of date March 31 – which the Prime Minister Narendra Modi in July said it was primarily responsible for the discoms’ poor financial condition.
Industry executives describe regulated assets as transferring current responsibilities to future generations and possibly resulting in tariff shocks. The Niti-RMI report said: “The Court of Appeal had previously ruled that regulatory assets must be recovered in three years. However, the magnitude of the assets could cause a tax shock. great authority”.

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