According to the rating agency, the thermal plant load factor (PLF) is also expected to decrease from 56% in the year 2020 to 54% in the year 2021.
Power demand is likely to fall by 1% in the current fiscal year, with discomfort losses increasing by almost Rs 20,000 crore as the coronavirus lockdown continues to impact economic activities, says Icra.
According to the rating agency, the thermal plant load factor (PLF) is also expected to decrease from 56% in the year 2020 to 54% in the year 2021.
“Assuming resumption of full operations by industrial and commercial establishments from July 2020, while May and June continue to witness partial activity, the demand for power is likely to decline by one percent in FY2021,” it said.
According to the Department, the consumption of electricity from high tariffs charged to industrial and commercial customers has decreased significantly due to the lock-down.
“This has in turn impacted revenues and cash collection by discoms from these high tariff paying consumers as well as other customer segments. As a result, the book loss level for the discoms at all India level is likely to increase by Rs 20,000 crore in FY2021, ” it said.
Icra further noted that any extension during the lockout era would have a further downside risk for growth in demand.
“The decline in thermal PLFs would further delay the resolution of stressed thermal assets, a majority of which are impacted by lack of long-term power purchase agreements,” Icra Group Head and Senior Vice President – Corporate Ratings Sabyasachi Majumdar said.
On the other hand, delays in the collection of discomforts will intensify the delays in payment to power generation companies that are already reeling under high payment charges of more than Rs 92,000 crore as of February 2020.v
“In this context, the timely and adequate liquidity support from the respective state governments, including the payment of regular agriculture subsidy, remains extremely crucial,” Icra’s Girishkumar Kadam said.
