“Negative outlook on energy infra for 2nd half of FY21”

Ind-Ra expects the effect of liquidity enhancement on discoms to be temporary and payables from discoms are likely to increase slightly by the end of 2020-21 year-on-year.

India Ratings and Research (Ind-Ra) has maintained a negative outlook on energy infrastructure for for second half of FY21, stemming from a likely low demand, driven by low thermal plant load factor and subdued wind generations, and the resultant impact on coverage metrics.

Ind-Ra expects the effect of liquidity enhancement on distribution companies (discoms) to be temporary and payables from discoms are likely to increase slightly by the end of 2020-21 year-on-year. Absent this, the receivable profile would have exacerbated the generators’ problems. “Policy actions such as the RBI’s COVID-19 moratorium and discom package play a critical role in beefing up liquidity for projects. That being said, the weak operating profiles of most discoms continue to be drag on the sector,” the research agency observed.

However, Ind-Ra has revised outlook of solar power sector from negative to stable. Solar generation in first quarter of FY21 was slightly lower (3 percent – 4 percent) than that of first quarter of FY20. Seasonal variations to some extent depending on the monsoon duration in a year are not unusual for solar projects. Project and grid availability have been above 95 percent for most of the portfolio.”

Sporadic instances of grid issues because of overloading at the substations belonging to intrastate transmission systems and tracker underperformance have led to significant deviation in generation compared to estimates in few projects, the agency said.

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