Energy demand to grow 6-7% in FY22; discom finances under pressure: ICRA
Electricity demand in the country is expected to witness a growth of 6-7 per cent in FY22, against an estimated decline of 2-2.5 per cent in FY21.
This growth is likely to be driven by a favourable base effect and likely recovery in demand from the commercial and industrial (C&I) segments. As a result, the all-India thermal plant load factor (PLF) is likely to improve to 57-58 per cent in FY22 from the estimated level of 53 -54 per cent in FY2021, although it still remains subdued, according to ICRA.
Sabyasachi Majumdar, Group Head & Senior Vice President – Corporate Ratings, ICRA, said: “Given the subdued thermal PLF, lack of visibility in signing of new power purchase agreements (PPAs) for thermal IPPs, and modest tariffs in the short-term power market, the credit outlook on the thermal power segment continues to remain negative.
As a result, the resolution of the stressed thermal assets in the private segment remains slow, with over 80 per cent of the 40 GW stressed coal-based projects unresolved. On the other hand, the credit profile of the Central power generation utilities is supported by the presence of long-term PPAs under the cost-plus tariff structure, and strengths arising out of sovereign parentage.”
The credit outlook also remains negative for the distribution segment, given the continued weakness in the financial position of most state distribution utilities (discoms).
