CRISIL ratings for PSEB
Chandigarh
April 30:
Domestic credit rating agency, CARE has retained the earlier assigned structural obligation (SO) rating of ‘CARE A-’ for the non-statutory liquidity ratio (SLR) bond issues of the state government-owned, Punjab State Electricity Board (PSEB). In tandem, CARE has reaffirmed its rating of ‘CARE BB+’ to the long-term bank facilities of PSEB. Furthermore, CARE has also reaffirmed the ‘PR4’ rating and 'CARE BB+/PR4' rating, respectively, to the short-term and long or short term bank facilities of the utility.
The ratings take into account PSEB’s status as a regulated monopoly for the generation, transmission and distribution of power in Punjab, own generation plants, and wide transmission & distribution (T&D) network. The ratings factor in the favorable socio-economic infrastructure of the state, improving liquidity position and the better position of the fiscal deficit of the state government. The enactment of the Fiscal Responsibility Bill, successful achievement of targets, as per the Twelfth Finance Commission recommendations, and a favorable economic outlook are the other positive drivers for the rating.
However, the rating is constrained by the weak financial performance, high level of cross subsidization, increasing dependence on power purchase, high T& D losses, stagnant capacities, increased debt levels and limited progress in implementing the reforms in the power sector in the state. Moreover, the rating is constrained by the limited financial flexibility of the state government, as reflected by the high level of committed expenditure and the elevated outstanding liabilities of the state.