ICRA downgrades MSEB over Dabhol fracas

ENS ECONOMIC BUREAU

MUMBAI, OCTOBER 18: Rating agency ICRA has downgraded the rating assigned to Maharashtra State Electricity Board’s (MSEB’s) bond programmes aggregating to Rs 2,015 crore, from ‘LAA-’ (SO) to ‘LA+’ (SO). The rating has been placed under rating watch. “The revised rating indicates adequate safety. The rating is based on the unconditional and irrevocable guarantee by Government of Maharashtra (GoM),” ICRA said. The revised rating reflects the continued uncertainty on the timing and likely manner of settlement of MSEB’s payment dispute with Dabhol Power Company (DPC), and its impact on the financial position of MSEB and GoM. Though MSEB had stopped making payments to DPC, the latter had been sending monthly bills to the board. DPC had recently sent the August and September bills totalling Rs 209 crore. It had sent the bill arguing that the capacity payments will accrue every month. The downgrade has come at a time when the High Court decided to hear from December 11 a petition filed by DPC challenging the jurisdiction of Maharashtra Electricity Regulatory Commission (MERC) to adjudicate its dispute with MSEB. ICRA has revised the rating asigned to the Rs 150 crore non-convertible debenture programme of Jindal Iron & Steel Company Limited (JISCO) to LA- (SO) from LAA- (SO). The rating has been placed under ‘Rating Watch’. The revised rating indicates adequate safety. The rating is based and irrevocable guarantee from IFCI Limited for payment of principal and interest on the debentures.