No. 16 - 2020 / Lock down effect on DISCOMS                        25-03-2020

Sri Narendra Modi

Hon'ble Prime Minister

Govt of India

New Delhi

Sub: Financial impact of lock down on DISCOMS

Respected Sir,

  The power demand in the country has taken a sharp dip
after the announcement of lock down as there is complete shut
 down of industrial, commercial and railways.This power
 demand dip will adversly effect the revenue of state power
utilities (Discoms) as their major source of income has been blocked.

         At all India level the power demand has come down to
121937 MW from 154045 MW. The power supply has also crashed to
2975 MU from 3565 MU. Power demand has come down by 20% due to lock down. Now highly consuming sectors like railways, industry, commecial are
 using electricity at reduced pattern and hence  revenue  coming
 to Discoms from these high end earning sources will crash.
       The lower strata of consumers cannot be able to make payments to DISCOMs and the door to door billing is also suspended. Hence there will not be any fund flow left over to meet monthly salary to power sector employees in coming days. We Power employees and engineers are in essential services sector and our employees are continuously rendering their services even in the odd life threat situation in this hour of crisis. Banks are also not in a position to extend any loans. 

2. These containment measures have resulted in a sudden fall in electricity bill collections of the DISCOMS by 80% over the last few days. Even though e-billing/ online payments are available and are being encouraged , the
restrictions imposed on people movement, loss of livelihood and the abrupt
change in the behavior of the people have resulted in a sudden dip in revenue
collections of DISCOMs. The DISCOMs use their daily collections to make
payments for debt servicing and power generators who in turn make daily
payments for coal/railways/lenders. The sudden fall in collections has resulted in inability of DISCOMs to make daily payments not only to generators which in
turn is affecting the coal payments and coal transport by railways, but also debt
servicing to banks/financial institutions.

3. It is noticed that the daily electricity demand has fallen by 20% due to
the shutdown of various commercial/ business/ industrial establishments; as a
result there is high likelihood of a revenue short fall in the coming months.
However, utmost care is being taken to provide uninterrupted power supply,
electricity being an essential service.

4. Daily release of payments to generators/ lenders and to coal suppliers,
transporters, washeries etc. is becoming a challenge for the DISCOMs. It is also essential for all the power plants to maintain adequate coal stocks in this
emergency.  Funding support for power sector - an essential service - if inadequate, would lead to its failure and unnecessarily impair the economic prosperity of the country once the health crisis has passed. Hence All India Power Engineers Federation (AIPEF) requests you  that the following urgent measures may kindly be taken to support the DISCOMs / power sector.

Supply chain support
A. Essential service. Declare coal mining activity along with connected
forward/ backward linkages such as coal transport as essential service and
ensure regular availability of coal.
B. Uninterrupted coal supply. All coal suppliers and miners may be
directed to supply coal as per the existing FSA, without insisting on daily
payments to all the power plants till the crisis lasts.
C.  Railways may be directed to transport coal to power plants
without insisting on daily payments.
Liquidity Support
D. RBI may be requested to issue special instructions to the
banking sector to extend time to the power generators/DISCOMs for
repayment of the debts and interests due till 31.3.2020 without classifying
the accounts as sub-standard/NPA;
E. Credit Support. Banks and banking institutions like PFC, REC may be
directed to lend required amounts to the DISCOMs for the working capital needs;

F. Debt forbearance. Facilitate debt forbearance between for DISCOMs/
Power generators and the lenders for the affected period;
G. Offer debt repayment reimbursement or subsidy to DISCOMs;

H. Discoms may be allowed to defer LC Payment to private generators for three months or till the crisis continues.

Thanking you with regards.

Sincerely Yours

Shailendra Dubey

Chairman