The Government of Andhra Pradesh has urged the Center to provide immediate financial assistance to the beleaguered power sector of the State that is facing serious financial crisis.
During the nationwide lockdown, the sharp drop in power consumption and revenue collections and the growing burden of paying fixed charges to power generators plunged the state power sector into crisis.
Official deputed
Aniruddha Kumar, Joint Secretary, Union Ministry of Resources, has been appointed by the Centre to coordinate with the AP Administration.
Electricity consumption has fallen by 20 per cent, according to statistics, and tax generation is down by almost 80 per cent. With the lockdown in place, it is estimated that in the first quarter (April to June-2020) there will be a drop in electricity demand of 3,200 million units (MU) and a loss of some 2,500 crore in revenue collections.
In reality, disk revenue collections declined by 36.73 per cent in March and overall power sales fell from the planned range of 5,000 MU to 5,500 MU in the same month to 4,500 million units.
Drop in power demand
Power revenues have been affected as the factories and commercial enterprises have been shut down, and economic activity remains limited to controlling the Carona pandemic spread.
“We are requesting the Union Power Ministry to provide relief to bridge the huge revenue gap that has arisen due to the lockdown. We are optimistic that the Centre will come to our rescue” said Energy Secretary N Srikanth.
Despite a 70 per cent drop in industrial and commercial electricity consumption and a drastic collapse in revenue collections, the problems of paying fixed charges to power generators need to be resolved.
The discoms have to pay about 7,500 crore per year to generate stations and about 1,450 crore per year to Power Grid Corporation of India Ltd (PGCIL) at fixed costs, according to officials. Discoms receive around 6,500 crore annually from customers by way of minimum demand charges (fixed costs).
The state's energy sector is under financial stress and discomfort has accumulated losses of Rs as of December 31 , 2019 due to high-cost power purchase agreements and the inevitable payment of fixed costs to thermal power generators in order to accommodate high-cost renewable energy.
Loan sought
In March and April, the state saved about 200 crore by buying power at lower rates on the spot market. A loan assistance of 2,000 crore has been sought by the power utilities.
As of March 31 , 2020, the AP Power sector has around 33,209 crore payables. This includes unpaid working capital loans payable by disks of approximately 17,087 crore and power purchase duties of approximately 16,122 crore.
The discoms have receivables of ₹13,244 crore from the State government.
