The extended lockdown to prevent the spread of coronavirus pandemic has impacted the electricity demand in the country, which is likely to see a decline of 1 per cent in this financial year. This would in turn result in an increase in losses to state distribution companies (discoms) by at least Rs 20,000 crore, as per ratings agency ICRA.
The capacity utilisation for Power companies which is measured in average thermal Plant Load Factor (PLF), is expected to fall from 56 per cent in fiscal 2020 to 54 per cent in 2020-21 against an earlier projection of 60 per cent. This is based on a base case scenario with the assumption of full lockdown till May 3, 2020, partial lifting of lockdown in the non-red zones in May and June 2020 and resumption of full operations by industrial and commercial establishments from July 2020.
The decline in high tariff paying industrial and commercial consumers has adversely impacted the revenues and cash collections for the power distribution utilities (discoms). This is likely to increase book loss for the discoms at all India level by Rs 20,000 crore in Financial Year 2021, with further downside risks arising from any extension in the lockdown period.
The situation would aggravate in case there are payment delays from the discoms to power generation companies which are already saddled with payment dues of more than Rs. 920 billion as of Feb ’20.
At this juncture, the timely and adequate liquidity support from the respective state governments, including the payment of regular agriculture subsidy, is very crucial.
Further, the under-construction renewable power projects are also likely to face delays in execution because of disruption in supply chain in India and labour availability.