New Delhi, Oct 16 (UNI) A slower pace of installation of smart electric meters under the Revamped Distribution Sector Schemes (RDSS) sanctioned projects and delay in realization of payments will reduce the project internal rate of return (IRR) of advanced metering infrastructure service providers (AMISPs) by up to 150 basis points (bps), said a CRISIL statement today.
This is assuming an execution delay of 6-12 months against budgeted timelines and a delayed payment cycle of six months against an exception of less than one month continuing over the entire ten-year period.
Ankit Hakhu, Director of CRISIL Ratings, said, “As per our study, a slower pace of installation can impact project returns by up to 60 bps. This is mainly because a delay in meter installation can result in deferment or withholding of both the recurring and lump sum payments by discoms. All of these delays lower the present value of future cash flows.”
Basically, the Smart Meter National Programme aims to replace 25 crore conventional meters with prepaid smart meters by March 2026. Under this initiative, distribution companies (discoms) award 10-year contracts to AMISPs, who then purchase and install meters on a piecemeal basis within 24-30 months and provide operation and maintenance (O&M) services for the remaining period.
CRISIL noted that the program has witnessed a slower pace of execution, with only 2.56 crore of the total 12.3 crore of the awarded smart meters being installed as of July 2025 across the country.
If the pace of execution was timely, 6 crore smart meters should have been installed during the said period.
Moreover, the ongoing delay in installation is also due to multiple factors, including delays in getting right of way, lack of awareness and acceptance among the population for smart meters, operational challenges by AMISPs, and deferred inspections by discoms for commissioning approval.
Ankush Tyagi, Associate Director of CRISIL Ratings said “ However, with continued reliance on discoms for clearance of payments, the receivables for AMISPs are getting stretched to 90-180 days in many cases. This will increase the working capital requirement. And, if it remains unresolved, the interest cost on working capital can potentially impact project IRRs by another 90 bps. Thus, overall, the slower pace of execution and higher debtor days can cumulatively reduce project IRRs by up to 150 bps.”
A speedy resolution of the implementation and payment issues as compared to our base case expectations is crucial to reduce the implications on project IRRs and credit risk, CRISIL said.
