Weekly Power Sector Round up: 14th December 2019

DISCOMs under severe financial stress: Ind-Ra

India Ratings & Research (Ind-Ra) published a study on the financial health of 29 power distribution companies which found that although book losses of DISCOMs have declined on an overall basis in FY18 as compares to FY17, the sector has been suffering severe financial stress.

Inadequate or no tariff hikes by many DISCOMs has led to revenue under-recovery, which has resulted in a huge pile-up of regulatory assets. There is also limited upside for revenue growth as commercial and industrial customers are already burdened with exorbitant tariffs.

Electricity demand in India falls for the 4th straight month

Power demand fell 4.3% in November, as compared to a year ago which is the fourth straight month of decline. This data potentially reflects a worsening industrial slowdown which has stifled economic growth in the country.

Economists see electricity demand as a crucial indicator of industrial output and a deceleration could mean a further slowdown. Slower economic activity has results in the fall of demand from luxury items to essentials leading large sectors such as the automotive industry to cut jobs.