Power demand falls 15% in May on muted factory usage

By: |
Published: June 9, 2020 5:30 AM

However, power consumed in the month was about 20% higher than April, reflecting more agricultural consumption in the sowing season and higher residential usage with the advent of summer.

Power usage in April, when the lockdown was implemented throughout the month, fell a record 22.6% year-on-year.Power usage in April, when the lockdown was implemented throughout the month, fell a record 22.6% year-on-year.

Electricity demand in May fell 15% year-on-year to 102 billion units owing to muted industrial and commercial activities. However, power consumed in the month was about 20% higher than April, reflecting more agricultural consumption in the sowing season and higher residential usage with the advent of summer.

Power usage in April, when the lockdown was implemented throughout the month, fell a record 22.6% year-on-year.

In May, power consumed by highly industrialised states like Gujarat, Maharashtra and Tamil Nadu was lower by 13.5%, 11.3% and 15%, respectively, than the volume of electricity supplied to these states in the same month in 2019. However, states such as Rajasthan, Karnataka and Madhya Pradesh — the largest agricultural power users — recorded annual decreases of 5.5%, 5.8% and 7.8%, respectively.

Since most of the revenue of state-run power distribution companies (discoms) come from industrial and commercial customers, lower usage by these categories means additional pressure on these already-distressed entities. Industrial and commercial consumers use about 40% of the total electricity supplied, but contribute about 50% of the discoms’ revenue share. Experts have pointed that lower power tariffs for industrial consumers can be a trigger to kick-start the economy by increasing industrial production.

On the other hand, agricultural consumers contribute less than 4% of the revenue share against 23% usage, increasing the dependence of discoms on infrequent and insufficient subsidy disbursals by states.

With lower revenue generation amid muted power demand, losses of discoms are seen to nearly double to around Rs 58,000 crore in the current fiscal, analysts at Crisil Ratings said. Discoms are also expected to end up owing lenders a staggering Rs 4.5 lakh crore by the end of this fiscal, recording a 30% annual rise and deteriorating their credit profiles.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1PMFBY: FM Sitharaman stresses on follow-up with states on subsidy releases
2Asset quality and profitability of banks in India and ASEAN economies will deteriorate, says Moody’s
3At 6.09% in June, inflation breaches RBI threshold, MPC may yet stay put on rate cut path