The Great Lockdown | Volume 1 | Issue 3
Much needed relief for Power DISCOMs; not without a caveat!
Covid19 has had the impact that we dreaded: it devastated the power sector.
The pain that is being felt by the power sector is not on account of reduced demand or supplies. It is the profound impact of demand load shifting from commercial to domestic. While the power consumption in April 2020 was lower by 25% compared to April 2019, collections was only INR 12,000 crore vis-à-vis INR 55,000 (a hit of 78%). This has put the power value chain in top line and liquidity crisis.
Responding to the challenges faced by Power DISCOMs, union government has approved financial package that entails a three-month moratorium and security deposit reduction to half. This article is a quick read about the deal and caveats around the relief measures for Power DISCOMs.
What’s the Deal?
Central public sector generation and transmission companies to continue supply and transmission of electricity to DISCOMs even in case of outstanding dues.
Moratorium of three months to DISCOMs for clearing dues to generation and transmission companies. No late payment penalties to be levied.
Reduction in security deposit / LC by 50% paid to generation companies till June 30, 2020 to ease liquidity crisis.
The caveats….
Clarifications have been issued (memorandum dated 1st April, 2020) that since electricity from Renewable Energy (RE) Generating Stations form only minor portion of total electricity generation, payments to RE generators will have to be done on regular basis as was being done prior to lockdown.
Close the deal…
DISCOMs to coordinate with electricity generation stations to liquidate 50% of the security deposit.
Instructions should be made to Finance Department to hold payments to electricity generation stations and prioritize other payments.
