Cabinet to soon approve the Rs. 70000 crore Covid-19 relief package for power firms

The power sector, one of the most important and essential services under the lockdown till May 3rd, is battling the issues of demand and liquidity compression.
The Union cabinet is going to approve Rs. 70000 crore next week a package for reeling under revenue loss due to lower power demand amid coronavirus lockdown. They are also setting up the alternative option for their dues towards electricity generation companies.

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A source told press agency “The Cabinet within the coming week can approve a package for power distribution utilities (discoms) which are under stress thanks to lower demand and cash crunch.”
“The package may include creating an alternate investment fund to pay off dues on behalf of the discoms to gencos. The discoms may ne charged nominal intertest rate and administrative express on that”, he added.

This package also include steps like directions to state and the central power regulators to reduce electricity traffics, the sources said.
According to the government data, discoms owe Rs 92,602 crore to power generation companies in February 2020.

In this report which was released on Friday, CII had suggested to measure easy credits facility for discoms to pay off their dues to gencos, lower electricity traffic especially for industrial and commercial consumers and also deferral of indirect taxes like electricity duty and coal cess.

Latest data from Power State System Operation (POSOCO) says that the total demand per week between March 23 to April 12 was 18 billion units, which is compared to 23 billion units during the week of March 9-15.

The nationwide lockdown has put a really hard stop as industries are closed, constructions are stopped, restaurants and shops are closed. It all started from March 24. Because of lockdown amid coronavirus many industries and companies are facing many losses, weather its private sector or public sector.

During this summer time where weather touches to 40 degree Celsius in many areas of the country, power sector has been fallen sharply. It is because the economic activity is restricted to contain the spread of the coronavirus in the nation.

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Current power consumption has dropped to 125 gigawatts, as it was around 165-168 gigawatts in last year a same month April 2019. This is a dramatic collapse of bill collections.

About 5500 crore earn during the last year by this electricity distributed companies in the cycle of 30-45 days, this year in the cycle of 30 days electricity distributed company has been fallen to around Rs. 12,000 Crore.

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“Now the Union power minister is going to approve the package of Rs. 7000 Crore to this electricity distributed company, early next week. It is also likely to offer a moratorium and restructuring of debt repayment by power companies spread over an eight-year period”, the official said.
“The last issues is being resolved through a Usance letter of credit or deferred payment of credit”, a power ministry said.

The Centre is going to introduce new reforms including limit cross-subsidies where industrial consumers have to pay higher so that discoms keep rates of domestic consumer low.

Aanad Kumar, Renewable Energy Secretary said that “ We are getting to create an alternate investment fund which will help to offer load and support to discoms and therefore the clear due to be paid to developers and generations. Our effort is to release maximum due payments from discoms to the facility generators.”
Kumar also added “We want confirm that our power supply and renewable power are protected and not compromised. We tried to clear all the financial dues to generators and developers to enhance the capital available with them.”

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