Pandemic to impact electricity demand: ICRA
The ratings firm, ICRA has stated that the repercussions of Coronavirus will spill over to other areas of the economy, adversely impacting electricity demand and cash flows for discoms. This will result in payment delays for power generation and transmission companies.
The pan-Indian three-week lock down will lead to the shutdown of the industrial and commercial establishments and stoppage of passenger railway services. These sectors constitute about 40% of the all India electricity demand and account for an even greater percentage of the discoms sales revenues given that they are the subsidising segments.
ICRA Ratings Group Head and Senior Vice President – Corporate ratings Sabyasachi Majumdar said, “The lockdown imposed by the government is likely to adversely impact the all India electricity demand, with demand expected to decline by about 20-25% on a year-on-year basis during the period of lockdown. This would in turn adversely impact the revenues and cash collections for distribution utilities in the near term, especially given the consumption decline from the high tariff paying industrial and commercial consumers and likely delays in cash collections from other consumer segments. The revenue deficit for the discoms is estimated to be about Rs. 130 billion per month, on all India basis. This would in turn adversely impact the liquidity profile of the discoms, increase their subsidy requirement and lead to delays in payments to the power generation and transmission companies.”