Andhra Pradesh power sector seeks financial support from Centre

V Rishi Kumar Hyderabad | Updated on May 03, 2020 Published on May 03, 2020

The expansion in power generation sector stood at 7.4 per cent compared to 4.2 per cent in the year-ago month   -  THE HINDU

Power Ministry deploys official to coordinate

The Andhra Pradesh government has urged the Centre to extend immediate financial assistance to the State’s beleaguered power sector, which is facing severe financial crisis.

The sharp drop in power consumption and revenue collections and the increasing burden of paying fixed charges to power generators during the nationwide lockdown has driven the State power sector into a crisis.

Official deputed

The Centre has nominated Aniruddha Kumar, Joint Secretary, Union Ministry of Power, to coordinate with the AP government.

According to officials, electricity consumption has fallen by 20 per cent and the revenue collection is down nearly 80 per cent. With the lockdown in force, it is estimated that there will be a reduction of 3,200 million units (MU) in electricity consumption and a loss of ₹2,500 crore in revenue collections during the first quarter (April to June-2020).

In fact, the revenue collections of discoms dropped by 36.73 per cent in March and the total sales of power fell to 4,500 million units in the same month from the expected range of 5,000 MU to 5,500 MU.

Drop in power demand

Power sales have been hit as the factories and commercial establishments have remained shut and economic activity remains restricted to containing the spread of the Carona pandemic.

“We are requesting the Union Power Ministry to provide relief to bridge 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.

The issues of paying fixed charges to power generators despite 70 per cent drop in industry and commercial electricity consumption and drastic collapse in revenue collections need resolution.

According to officials, the discoms have to pay ₹7,500 crore a year to generating stations and ₹1,450 crore to Power Grid Corporation of India. Ltd (PGCIL) towards fixed cost every year. Discoms receive ₹6,500 crore by way of minimum demand charges (fixed costs) annually from the consumers.

The State’s energy sector is under financial stress and discoms have accumulated losses Rs ₹29,000 crore as on December 31, 2019, due to high-cost power purchase agreements and unavoidable payment of fixed costs to thermal power generators to accommodate the high-cost renewable power.

Loan sought

The State saved around ₹200 crore in March and April by purchasing power in the spot market at lower prices. The power utilities have sought a loan assistance of ₹2,000 crore.

The AP Power sector has about ₹33,209 crore payables as on March 31, 2020. This includes outstanding working capital loans payable by discoms of ₹17,087 crore and power purchase dues of ₹16,122 crore.

The discoms have receivables of ₹13,244 crore from the State government.

Published on May 03, 2020
This article is closed for comments.
Please Email the Editor