NEW DELHI: One month of nationwide lockdown has done more damage to the power sector than what mismanagement by state utilities failed to do in years. The COVID-19 outbreak and the subsequent lockdown has squeezed power demand sharply in March and April and the fall has been such sharp that demand for full year 2020-21 is set to report a 1 per cent decline, first time in almost 36 years.
Not only this, with expectation that the lockdown may continue in large parts of the country beyond May 3, the discoms are set to return to yesteryears of adding losses after losses every year, making their operations unviable. An extension of the lockdown would impact the demand further.
"This aspect is not coming out clearly, but the lockdown has reduced industrial consumption of electricity, resulting in a sharp fall in demand. Also, as industrial consumers account for bulk of discoms' earnings and help subsidise tariff for households and agricultural consumers, their loss is set to balloon in FY21," said a former CERC chairman who asked not to be named.
The demand squeeze of 1 per cent is based on the assumption that while there is full lockdown till May 3, there may be a 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.
According to an analysis done by ICRA, an unit of ratings agency Moody's, the expected losses at state-run electricity distribution utilities (Discoms) would rise two-thirds to Rs 50,000 crore in FY21 with an addition of Rs 20,000 crore in book level losses in the current year itself. Discoms have already been reeling under low demand conditions for some time and this has impacted their revenue and ability to service payment dues to generators. (IANS)
Also Watch: Hagrama Mohilary organizes a press-meet on Coronavirus situation and distribution of Rations