New Delhi, March 10 (TIWN) Ratings agency India Ratings and Research has maintained a negative outlook on the power sector for FY22, on account of a further weakening in the financial position of distribution companies due to Covid-19 led business disruptions.

“The tranche-2 disbursements are dependent on the implementation of undertakings given at the time of sanction and disbursement of tranche-1 such as smart meters installation in government departments, liquidation plan for clearing of dues by state governments towards unpaid electricity dues and subsidy amount to discoms.” 

As per the agency, the power demand however has started improving post opening-up of the economy from September 2020 which is expected to lower the build-up of current dues by discoms in FY22. 

“Ind-Ra expects the power demand to grow at 9-10 per cent YoY in FY22, and hence the thermal plant load factors would recover. However, the recovery to above 60 per cent would be beyond FY23, given the continued thermal capacity additions of 6-8 GW.”