Consumers at the centre of PM Modi’s power sector review; no ‘one-size-fits-all’ solution for states’ woes

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Published: May 28, 2020 2:21 PM

Narendra Modi said that there is a need to enhance consumer satisfaction while increasing operational efficiency and improving the financial sustainability of electricity.

power, power companies, discoms, distribution companies, power demand, electricity demandAfter May 10, the electricity demand in the country has significantly improved, which also indicate the economic recovery. 

Prime Minister Narendra Modi today said that the power and new and renewable ministries should come up with state-specific measures to improve the condition of electricity in different states. Reviewing the power sector, Narendra Modi added that there is a need to enhance consumer satisfaction while increasing operational efficiency and improving the financial sustainability of electricity. He also said that the problems in the power sector, especially of the electricity distribution segment, differ across the states thus a one-size-fits-all solution is not effective. The PM’s statement has come at a time when the power sector is going through a profound crisis on the back of slow demand from industries due to a nationwide lockdown.  

However, the electricity demand that nosedived in April has gradually started to recover. After May 10, the electricity demand in the country has significantly improved, which also indicate the economic recovery.  On Tuesday, the power demand in India crossed the level of the same day last year. This has happened for the first time after March 22, after the lockdown has been substantially eased and economic activities have been allowed to a larger extent. While rising summer has increased the domestic load due to more power consumption from refrigerators and air conditioners, industrial consumption holds a larger share for the sudden increase in the overall electricity demand across the country. 

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Meanwhile, the coronavirus-led lockdown has made a hole of up to Rs 50,000 crore in the power companies’ pockets. Adding to the worse, this liquidity shortfall would likely worsen the challenging payment position in the sector, where distribution companies already owe Rs 90,000 crore pre-COVID to generators, CII had said citing PRAAPTI. Last month, India’s daily power demand declined by 25-28 per cent due to the closure of factories and offices while in energy terms, the drop in daily demand was nearly 100 crore units. It is also expected that the crisis in the power sector will transmit to the other related sectors such as conventional and renewable generators, transmission licensees, and other service providers in the power sector.

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