Govt finalises relief measures for power sector as demand slumps to new low

With a dip of 30% in demand for power due to the absence of commercial activity in the wake of the lockdown, the Centre has stepped in with a slew of relief measures to support the sector, said a top official familiar with the development.

These measures include a three-month moratorium on the payment of already financially-squeezed distribution companies (Discoms) to Generating Companies (Gencos) and no penalty on late payment.

The ministry is also working to ensure to ensure adequate supply of coal to prevent a possible disruption in electricity supply.

Union power minister RK Singh said the ministry is committed to ensure 24×7 electricity supply during lockdown. “Despite the lockdown imposed to contain the spread of the COVID 19 pandemic, the whole workforce of the power sector — generation, transmission, distribution and system operations — is working round the clock to keep all homes and establishments lit,” Singh said.

The ministry has issued directions that, till May 30, the payment security mechanism to be maintained by the Discoms with the Gencos for dispatch of power will be reduced by 50%. Directions have been issued by the ministry to the Central Electricity Regulatory Commission (CERC) to provide a moratorium of three months to Discoms to make payments to generating companies and transmission licensees, and not to levy penal rates of late payment surcharge. State Governments are being requested to issue similar directions to State Electricity Regulatory Commissions.

The lockdown has affected consumer payment of their dues to the Discoms. This has affected the liquidity position of the Discoms, thereby impairing their ability to pay to the generating and transmission companies. To address the liquidity problems of the Discoms, Singh has directed Generation/ Transmission Companies to continue supply/transmission of electricity even to Discoms which have large outstanding dues. “During the present emergency there will be no curtailment of supply to any DISCOM,” the power ministry has directed.

This comes at a time when outstanding dues by discoms stood are currently as high ₹82,414 crore till February this year.

“Even the Gencos would need support through some fiscal stimulus as they were already struggling with low capacity utilisation and mounting debtors from Discoms. Government may have to facilitate interest free working capital loans for Gencos. Else this contagion will spread to fuel suppliers and sustainability of all sector entities will come under question,“ said Debashish Mishra, Partner at Deloitte India,

Around 70% of power generation is from coal based power plants. In order to maintain the continuity of supply of coal by domestic coal companies and transportation by railways, the ministry is in touch with the ministries of railways and coal.

Union coal minister Pralhad Joshi on Saturday said coal supplies are declared as an essential service. In a statement, the coal ministry said all officials have been directed to ensure that critical coal supplies are maintained during the lockdown period due to COVID 19.

On an average, more than 22,000 wagons of coal were loaded per day and 1,400 wagons of food grains daily. On March 27, railways carried 20,488 wagons of coal. According to the data available for 134 coal plants across the country, there is an average coal stock for 24 days.

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