Indian power distribution companies revival key to generation volumes in 2017: Fitch

KOLKATA: The year 2017 is a test year for the success of the reforms package launched by India to address persistent financial and operating weakness of state-owned electricity distribution companies ( discoms), Fitch Ratings says in its Outlook report on the Indian utilities sector.

Progress under this programme should give some additional breathing space to the discoms, which is important for the overall electricity off-take from generators and improvement of plant utilisation levels, which are at historic lows.

Fitch expects the rated Indian state utilities to have large capex requirements in 2017. This will lead to only marginal improvement in their credit metrics. Investment opportunities abound - especially in renewable generation and electricity network assets - however, bidding discipline is key. We expect the ratings to remain stable in 2017. The linkages with the sovereign also provide a rating buffer for the state-linked entities.