Electricity consumption in Uttar Pradesh declined by 20.3% in April while Rajasthan recorded an annual fall of 21.3% in the same month.
Electricity demand in April, when the lockdown to contain the outspread of the coronavirus was implemented throughout the month, fell 22.6% year-on-year to 85.2 billion units, owing to muted industrial and commercial activities. This is the lowest growth in electricity demand in the country in any month in recent years.
The April electricity consumption recorded was also the lowest in corresponding months since 2016.
Power consumed by highly industrialised states like Gujarat, Maharashtra and Tamil Nadu in April was lower by 26.1%, 17.9% and 28.6%, respectively than the volume of electricity supplied to these states in the same month in 2019.
The three states are among the top five electricity users (other two being Uttar Pradesh and Rajasthan) and fall in power consumption in these places had already dragged down the country’s annual demand growth to a six-year low of 1.3% in FY20. Electricity consumption in Uttar Pradesh declined by 20.3% in April while Rajasthan recorded an annual fall of 21.3% in the same month.
Since most of the revenue of the state-run power distribution companies (discoms) come from industrial and commercial customers, lower usage by these categories mean additional pressure on the already distressed entities. According to information available in the latest tariff orders of these states, industrial and commercial consumers contribute about 55% of the discoms’ revenue in Gujarat, 73% in Tamil Nadu and 54% in Maharashtra.
Manufacturing of motor vehicles, textiles and petroleum products — a lot of these hubs are present in these three states — have been on the decline since FY20 due to lower demand and rising competition from other countries. Lower income clashes with discoms facing severe revenue shortage with rising difficulties in meter reading exercises and payment collection amid the country-wide lockdown.
Though the industrial and commercial sectors consume about half of electricity supplies, they contribute more than 70% of the revenue of the discoms. Tariffs on domestic consumers is on an average around 40% lower than that for industrial users of power. Experts have pointed that lower power tariffs for industrial consumers can be a trigger to kick-start the economy by increasing industrial production.