Ratings agency ICRA in its latest report has said that power demand is likely to decline by 1 percent in the current financial year (FY21) with electricity distribution companies’ (discoms) losses widening by almost Rs 20,000 crore as a lockdown due to coronavirus pandemic continues to impact economic activities. It said thermal plant load factor (PLF) is also expected to fall by 54 percent in FY 2021 as compared to 56 percent in FY 2020.
According to the agency, electricity consumption from high tariff paying industrial and commercial consumers has significantly declined due to the lockdown. It noted that this has in turn impacted revenues and cash collection by discoms from these high tariff paying consumers as well as other customer segments. As a result, it said the book loss level for the discoms at all India level is likely to increase by Rs 20,000 crore in FY2021. It added that any extension in the lockdown period would have further downside risk for the demand growth.
The report further stated that the decline in thermal PLFs would further delay the resolution of stressed thermal assets, a majority of which are impacted by lack of long-term power purchase agreements. On the other hand, delay in collection by discoms would aggravate the payment delays by them to power generation companies, which are already reeling under large payment dues of more than Rs 92,000 crore as of February 2020. In this context, it said the timely and adequate liquidity support from the respective state governments, including the payment of regular agriculture subsidy, remains extremely crucial.