Weekly Power Sector Round up: 27th June 2020

Thermal power plants’ PLF drops to 47.9% in May

Thermal power plants’ plant load factor (PLF) dropped to 47.9% in May 2020 as compared to 63.6% for the corresponding period last year. This drop has been due to the decreased power demand in the country due to multiple factors, according to India Ratings and Research (ind-Ra).

Amongst all the power sources, Thermal PLFs were the heaviest hit due too the must run status of other sources such as nuclear, hydro and renewables.

The lockdown imposed in light of COVID-19 has dropped power demand due to a lack of industrial and commercial activity. This has caused a cascading effect throughout the sector.

Rs 90k crore liquidity infusion for DISCOMs a dud

The Rs 90k crore liquidity infusion announced by the Central Govt through PFC and REC has been a did since state governments are unwilling to extend guarantees on loans given to DISCOMs due to their own shaky financial condition.

State governments themselves are facing a revenue crunch as the lockdown imposed in light of COVID has severely impacted tax collections. They have had to turn to high-cost borrowings and are unwilling to add further deficit to their balance sheet with these loans for DISCOM.

Customs duty to be imposed on solar modules, to rise to 40% in a year

The Central Govt has announced that it will levy custom duties on solar modules, starting from 20% to 25% from August and ramping up to 40% in a year. For solar cells, the duty will start at 15% in August and ramp up to 30% in a year.

Although this move is intended to discourage imports from China and encourage local production, it is likely to hurt power producers and push tariffs reached through competitive bidding, higher.