The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by the finance minister, Nirmala Sitharaman in 5 tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component under the first tranche provides for a special loan of Rs 90,000 crore from Rural Electrification Corporation [REC], Power Finance Corporation [PFC] to discoms to enable the latter clear their dues to IPPs and PSUs....
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Category: Power
Discoms on the ventilator, how long?
The power distribution companies [discoms] are the core of the electricity supply, transmission and distribution chain in the country. Mostly owned and controlled by state governments, the discoms source power from independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] etc besides their own generating stations. Yet, these have been in the news for all the wrong reasons in particular, increasing losses, galloping debt and rising dues to IPPs/PSUs etc. During 2015-16, the combined loss of all discoms was about Rs 52,000 crore even as their debt had reached a colossal about Rs 400,000 crore. Under an unprecedented financial restructuring packages [FRP] orchestrated by the Centre, the state governments took over 75% of this debt...
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Corona pushes discoms to the brink
Given the nature of the crisis, all concerned states should promptly release funds from their budgets to enable discoms to clear all outstanding dues This has meant the destruction of nearly 40% of the total electricity demand. ————————————————————- Even as corona has triggered widespread devastation, a major casualty is the power sector. Following the nation-wide lockdown announced by prime minister Narendra Modi on March 24—this was an absolute must given the hyper-contagious nature of the virus and an overarching need to preempt community transmission—most industries and businesses, including the Railways (passenger segment), have downed their shutters. This has meant the destruction of nearly 40% of the total electricity demand. All consumers, be it industries, shops and establishments, households, farmers, etc, fulfil their...
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Corona pushes discoms to the brink
Even as Corona has triggered widespread devastation, a major casualty is the power sector. Following the nation-wide lock-down announced by the Prime Minister, Narendra Modi on March 24, 2020 [this was an absolute must given the hyper-contagious nature of the virus and an overarching need to pre-empt community transmission], most of the industries and businesses besides Railways [passenger segment] have downed their shutters. This has meant complete destruction of nearly 40% of the total electricity demand. All consumers – be it industries, shops and establishments, households, farmers etc – buy their electricity requirement from the power distribution companies [discoms] [earlier known as state electricity boards (SEBs)]. Mostly owned and controlled by state governments they in turn, source power from independent...
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Powerless discoms
The house must be set in order, else this will have catastrophic consequences for power producers, banks, States and Modi’s plans to supply electricity to every household Even as there are incessant promises from the ruling establishment of electrifying all villages in the country and making power available to each and every household for maximum duration in a day, the most crucial wheel required for making this happen has got stuck. And the irony is that the political brass is only paying lip service to the urgent need for extricating it. The reference here is to the power distribution companies (discoms) — mostly owned and controlled by State Governments which procure electricity from the independent power producers (IPPs), Public Sector...
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Discoms – a 4th bail-out package in the offing
Even as there is incessant talk from top echelons in the ruling establishment of electrifying all villages in the country and making power available to each and every household for maximum duration in a day, the most crucial wheel required for making this happen and which must run smoothly at the desired pace has got stuck. The irony is that the political brass is only paying lip service to the urgent need for extricating it. The reference here is to the power distribution companies [discoms] – mostly owned and controlled by state governments which procure electricity from the independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC], Damodar Valley Corporation [DVC] etc besides their own...
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PM’s renewable pitch ignores existing power capacity
During an interactive session at the Bloomberg Global Business Forum in September, Prime Minister Narendra Modi faced a dilemma on the issue of clean energy versus coal-based power. Even as Modi reiterated his commitment to rapidly promote the use of renewable energy solar, wind, bio-mass, small hydro (India has more than doubled its original goal of having power capacity on renewable from 175 GW by 2022 to 450 GW by 2030)— he was confronted by the Bloomberg CEO Michael Bloomberg on what plans he had with regard to use of coal which has been the biggest polluter (India has the third-largest reserves of coal in the world and currently, about 54% of generation capacity is based on its use). Fully conscious...
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Discoms – burgeoning losses, continued populism
The increasing losses of power distribution companies [discoms] – firms which procure electricity from the generators and distribute to the consumers – have once again started haunting the states and union government alike. In 2015, the union government had orchestrated a financial restructuring package [FRP] under which over 75% of the outstanding debt about Rs 400,000 crore of discoms was taken over by state governments whereas for the balance 25%, they were allowed to issue bonds – backed by sovereign guarantee – to raise funds at concessional interest rate. The FRP was intended to enable discoms start on a clean slate, reduce losses and eventually eliminate them. During 2016-17 and 2017-18, they did show significant reduction but during 2018-19, this...
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Boost renewable but not at the cost of existing non-renewable assets
During an interactive session at Bloomberg Global Business Forum [GBF] on September 25, 2019 coinciding with the United Nations General Assembly [UNGA], Prime Minister, N Modi faced a dilemma on the issue of clean energy versus coal based power. Even as Modi reiterated his commitment to rapidly promote use of renewable energy viz. solar, wind, bio-mass, small hydro [India has more than doubled its original goal of having 175,000 mega watt (MW) of power capacity on renewable to 450,000 MW; it is also the founder of International Solar Alliance (ISA) jointly with France with 121 countries having already joined the ISA], he was confronted by CEO, Bloomberg on what plans he has with regard to use of coal [India has...
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Powerless, cosmetic moves
Given the extant tariff policy and Power Purchase Agreements, the Centre’s plans to reform PPAs to provide power at competitive prices and make discoms viable fall far short The Union Government has set up a committee to reform Power Purchase Agreements (PPAs) to ensure power availability at competitive prices and make distribution companies (discoms) viable. A PPA is a contract between a generation company (genco) and discom which lays down the terms of electricity purchase by the latter from the former, including the tariff, which is subject to approval by the State Electricity Regulatory Commission (SERC). The Cabinet is also considering a new tariff policy which will inter alia require discoms to pay a surcharge to the genco for delayed payment, which...
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