Power sector limps back to normalcy

COVID INCREASED CASH-STARVED DISCOMS’ DUES OWED TO GENCOS, WHICH HIT 24X7 POWER SUPPLY

NEW DELHI: Limping back to normal after bearing the brunt of the pandemic this year, the power sector needs a slew of reforms, especially implementation of consumer rules to achieve the government’s ambitious target of 24X7 electricity supply for all in 2021, and also steps to improve the financial health of discoms.

The most important task before the government will be to deal with the sickness of power distribution utilities (discoms), which are cash-strapped and unable to pay the electricity generation firms (gencos) for ensuring 24X7 power supply for all.

There has been a cascading effect of the pandemic on power demand and revenue collection of discoms, a scenario that has aggravated the stress on the already troubled gencos. There has been an issue with cash flow and finance of gencos due to delay in payments by discoms.

Going ahead, central as well as state governments along with power regulators would need to be quick and decisive to respond to the evolving scenario as economic activities are unlikely to return to pre-Covid-19 levels immediately.

This year, the government took concrete steps to reduce the stress in the power sector by announcing measures under the Aatmanirbhar Bharat package for liquidity infusion of ₹1,20,000 crore for discoms to pay off gencos’ bills till June 2020.

For easing coal supplies, Letter of Credit (LoC) facilities were initiated.

However, the discoms’ financial sickness continues to plague the sector and impact its sustainability, despite the liquidity infusion of ₹1,20,000 crore.

As per latest data from the power ministry, total outstanding dues of discoms at the end of October 2020 was ₹1,39,021 crore, which is 30% higher than ₹1,06,343 crore seen in October 2019.

About ensuring 24X7 power supply across the country, Power Minister RK Singh said that the Electricity (Rights of Consumers) Rules would ensure delivery of services.

The rules clearly mention that “to ensure reliability of supply, the discoms shall supply 24x7 power to all consumers. However, the Commission (power regulators) may specify lower hours of supply for some categories of consumers like agriculture,” the minister said.