Integrated Rating for State Power Distribution Utilities

The Integrated Rating methodology for State Power Distribution Utilities was developed by  Ministry of Power  (MoP) and unveiled in the State Power Ministers conference held in July 2012. The methodology  was developed by MoP keeping in view poor financial health of State Distribution utilities and the need to base future funding exposures on an objective rating mechanism. The main objectives of developing the integrated rating methodology for the state distribution utilities are:

• To devise a mechanism for incentivising/dis-incentivising the entities in order to improve their operational & financial performance.
• To facilitate realistic assessment by Banks/FIs of the risks associated with lending exposures to various distribution utilities and enable funding with appropriate loan covenants for bringing improvement in operational, financial and managerial performance. 
• May serve as a basis for Govt. assistance to the state power sector through various schemes like RAPDRP, NEF, etc. MoP has mandated Power Finance Corporation (PFC) to co-ordinate the rating exercise, which in turn has appointed ICRA & CARE to carry out the rating exercise. The exercise does not cover State Power/Energy Departments and private sector distribution utilities.

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