NEW DELHI: Prime minister Narendra Modi on Friday asked the power ministry to ensure uninterrupted supply and initiate measures to maintain the sanctity of contracts and enhance sustainability in the sector as the country, still under the shadow of the coronavirus pandemic, moves to gradually restart economic activities.
During a meeting to take stock of the pandemics impact on the sector, a government statement said the PM sought further reforms to improve the viability of discoms, including rationalisation of tariffs, timely release of subsidies and improved governance. Some of these issues are being addressed through the Electricity Act of 2020, the draft of which is being discussed among stakeholders.
The PM suggested boosting renewable energy sources. As reported by TOI, the International Energy Agency on Thursday said only renewables have shown resilience as energy demand is headed to drop 6%, or the most since World War-II, this year under the pandemics impact. The thrust on propagating renewables puts the prime ministers stress on enforcing contracts into perspective. Sanctity of contracts emerged as a major worry for investors after Andhra Pradesh reneged on previous contracts and sought to renegotiate tariffs.
But the viability discoms remains a larger worry. A Delloitte report in March said the sharp fall in demand and disruption in bill collection due to the pandemic have led to a cash shortage of Rs 300 crore per day for discoms, which have already crossed the pay-by date for bills worth Rs 92,000 crore to generation companies (gencos) as of February. The daily cash crunch will push them to further defer payments to gencos, allowed under a recent government package. The result could be a monthly gap of Rs 15,000-16,000 crore in gencos receivables, says the report on the pandemics impact on the sector.
Reduced power purchase by discoms due to lower demand will not be enough to cover the revenue loss. The small number of consumers making online bill payments will reduce revenue flow through the lockdown and drag down collection efficiency. “For each 10% fall in collection efficiency, revenue reRead More – Source
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