Power Demand To Shrink 6 Percent In FY21: ICRA


With the re-imposition of lockdown restrictions in many parts across the country, the all India electricity demand is likely to decline by 5% to 6% in FY21 over FY20, against an earlier estimate of 1% made in April 2020, a report by credit ratings agency ICRA said.

The revised energy demand estimate assumes demand decline of 3.5 – 4% in Q2 and Q3 FY2021 and a marginal recovery of about 1% in Q4 FY2021, given the slower pace of recovery expected in industrial and commercial activity in the country.

Power generators will see their plant load factors (PLFs) falling as a result. ICRA estimated that the fall in demand will supress the thermal PLF on an all India level to about 50-51% in FY2021 against the agency’s earlier estimate of 54% and actual PLF of 56% in FY2020. The all India electricity demand declined by 16.2% in Q1 FY2021 on a year-on-year (Y-o-Y) basis, because of the lockdown imposed to control the Covid-19 pandemic.

Given the adverse impact of covid-19 on discom finances, the central government announced liquidity support of ₹900 billion for the state power discoms, in the form of loans against receivables, from Power Financial Corporation (PFC) and Rural Electrification Corporation (REC).

However, there has been slow progress in off-taking these loans so far; timely implementation of this scheme remains important to clear the outstanding dues to power generating companies, which stand at Rs. 1.17 trillion as of May 2020.