Opportunities for the Indian power sector in the post-COVID world
The real impact of COVID-19 in India started with the government’s announcement of the first lockdown on 24th March 2020, which finally extended till 31st May 2020. Post which, unlocking started to take place in a phased manner.
The impact of these two months of lockdown was severe with the national electricity demand falling to as low as 20% from previous year. The National Load Dispatch Centre (NLDC) reported a sharp dip in peak demand, by almost 25% in April 2020 as compared to the same month of the previous year. Similarly, for the same month, the energy met also declined by nearly 20% from previous year.
While many other non-critical operations came to a halt, the power sector did well to cope up the unprecedented challenges and ensured continuity in the last three quarters. However, the sector had severe financial impact owing to the decline in demand especially from the cross-subsidizing consumer categories.
Government interventions
The government of India was prompt in taking requisite steps in addressing the COVID impact through sector specific financial packages. The power sector was also covered in the government’s financial stimulus plan. Power discoms were given a liquidity infusion of Rs. 90,000 crores for paying pending dues of the generation company.
Further, an additional borrowing limit of 0.25% of GSDP was allowed for specific initiatives in the State power sector. In addition, as part of the Atmanirbhar Bharat scheme, the government is focusing more on domestic manufacturing in the country, thereby reducing dependence on imported goods. In the long run, this would help minimize supply chain issues in the sector.
Green shoots have started emerging
The November bulletin of the RBI reported that the pace of GDP contraction has eased to 8.6% in second quarter of FY 2020-21.
