With revenues hit, AP power utilitieschalk out contingency plan to revive

V Rishi Kumar Hyderabad | Updated on April 05, 2020

Power utilities in Andhra Pradesh have charted out a contingency plan to overcome the fallout of the caronavirus crisis. With the lockdown adversely affecting their revenues, the focus is on recovery plans for the next six months.

According to State Energy Secretary Srikant Nagulapalli, who has been reviewing the power sector during the lockdown period, “the power sector has geared up to provide uninterrupted power supply to all sections in this crucial period of health emergency”.

The State’s overall drop in power consumption ranged between 10-21 per cent, and the situation may worsen in the next two monthsif the present trend continues in the State.

The AP Grid consumption, which was hovering around 190.5 million units (MU) on March 21, dipped to 174.5 MU on March 22 and to 154.5 MU by March 26. This severely affected revenue collection in the last week of March.

The collection of ₹158.6 crore was down by about 40 per cent against the same period last year.

“Discoms will not be able to make payments to power generators and the debt servicing made by the revenue collections will also be impacted,” officials said.

To bail out power utilities, the State has come out with a rescue plan by extending guarantees to secure a ₹3,500-crore loan from Power Finance Corporation Limited. This is to meet the working capital requirement during this unprecedented period.

On the request of power utilities, the Union government revised the letter of credit (LC) requirement. Besides, power utilities have sought a moratorium for three months on debt servicing schedules with the help of the Central and State governments. This will reduce the stress on the cash flows and gives window for further financing.

With the revised letter of credit norms, power utilities tied up the State subsidy for nine-hour free power supply to agriculture directly with 16 Central Generating Stations. This is to ensure that the utilities do not default on payments.

“Even after these measures, the monthly additional financial deficit is expected. Therefore, the utilities have formed a special task force,” said a senior official.


Officials said that notices were issued to the 315 power generators invoking the force majeure clauses of the PPA to insulate discoms from the fixed charges claims and other contractual obligations due to the steep fall in demand and other unforeseen conditions that may arise.

About 14 lakh metric tonnes of coal reserves have been stocked in the APGenco plants and some units were brought under reserve shut down due to the fall in demand for electricity.

The gas plants are being run at higher PLF (plant load factor), taking advantage of the fall in prices, and renewable energy resources are being utilised effectively.

Published on April 05, 2020

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