Power demand to fall by 1% in FY21: Icra

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Published: April 29, 2020 6:38 PM

According to the rating agency, thermal plant load factor (PLF) is also expected to decline to 54 per cent in FY 2021 from 56 per cent in FY 2020.

According to the agency, electricity consumption from high tariff paying industrial and commercial consumers has significantly declined due to the lockdown.According to the agency, electricity consumption from high tariff paying industrial and commercial consumers has significantly declined due to the lockdown.

Demand for power is likely to fall by 1 per cent in the current fiscal with discom losses widening by almost Rs 20,000 crore as the coronavirus lockdown continues to impact economic activities, says Icra.

According to the rating agency, thermal plant load factor (PLF) is also expected to decline to 54 per cent in FY 2021 from 56 per cent in FY 2020.

“Assuming resumption of full operations by industrial and commercial establishments from July 2020, while May and June continue to witness partial activity, the demand for power is likely to decline by one per cent in FY2021,” it said.

According to the agency, electricity consumption from high tariff paying industrial and commercial consumers has significantly declined due to the lockdown.

“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, the book loss level for the discoms at all India level is likely to increase by Rs 20,000 crore in FY2021, ” it said.

Icra further noted that any extension in the lockdown period would have further downside risk for the demand growth.

“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,” Icra Group Head and Senior Vice President – Corporate Ratings Sabyasachi Majumdar said.

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, the timely and adequate liquidity support from the respective state governments, including the payment of regular agriculture subsidy, remains extremely crucial,” Icra’s Girishkumar Kadam said.

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