May 5, 2020

Power cos suffer with shops, factories in lockdown; electricity usage falls this much in April

Power cos suffer with shops, factories in lockdown; electricity usage falls this much in April


The sharp fall in demand from the high tariff paying industrial and commercial sectors has resulted in a 17% drop in daily power demand.

Power companies are bearing the brunt of the coronavirus pandemic as the electricity consumption has taken a significant hit during the period of the nationwide lockdown. The electricity consumption in April fell by 22.75 per cent to 85.05 billion units (BU), compared to 110.11 BU in the same month a year ago, PTI reported. The major reason behind the steep fall in demand is the restriction on commercial and industrial activities. The sharp fall in demand from the high tariff paying industrial and commercial sector, which accounts for nearly half of the country’s electricity demand, has resulted in a 17 per cent drop in daily power demand during the period 16 Mar – 19 Apr 2020, Care Ratings said citing POSOCO.

The fall in demand has made a deep hole in the pocket of the power companies. Estimates show that the Covid-19 led lockdown has made a hole of up to Rs 50,000 crore in the power companies’ pockets, which may further worsen as the distribution companies already owe Rs 90,000 crore pre-COVID to generators, CII said citing PRAAPTI. It is also expected that the liquidity gap may transmit to other players in the value chain, such as conventional and renewable generators, transmission licensees, and other service providers in the power sector as well. The effects of coronavirus led demand shortage can affect the firms’ ability to buy fuel, meet debt service obligations, and ensure seamless operations.

Also Read: Covid lockdown relaxation: Industry needs clarity on resuming construction, installation of new telecom towers

Meanwhile, the government and the RBI have announced various relief measures for the power sector. These measures include (i) 3 months moratorium to DISCOMS for making payments to generating companies, (ii) 3 months moratorium in debt servicing, (iii) time extension is being provided for all renewable energy projects, which are impacted by the supply chain disruption due to COVID outbreak, under the force majeure clause, (iv) the late payment surcharge (LPS) payable by DISCOMS to generation and transmission companies has been reduced from 1.5 per cent to 1 per cent per month from 24 March – 30 June 2020, etc.

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