Centre likely to lower tariff for discoms to ensure uninterrupted supply

The government may soon announce more steps -- like cheaper working capital and lower tariffs -- for power distribution companies (discoms) to ensure uninterrupted electricity supply during the lockdown to contain Covid-19.

"The Power Ministry is working on a proposal to provide relief to discom to keep them afloat during the lockdown, especially when the demand is low and their bills collections is negligible," according to a source.

The power demand has came down by almost one third during the lockdown. The demand met was down by about 29 per cent at 121.38 GW on April 10 compared to 170.52 GW on the same day last year.

The demand was down mainly due to lower requirements from industry and state power discoms. The peak power demand met is the actual highest energy supply during the day across the country.

According to sources, the discoms are facing a liquidity crunch and therefore the efforts of the central government would be to provide them working capital at lower interest rates. Besides, the government may direct central and state power regulators to reduce tariff for the discoms, the source added.

However, these measures may require Union Cabinet approval as it has financial implications.

The proposal could be sent for the Cabinet approval next week, the source said.

Last month, the power ministry had taken some measures to provide relief to discoms, which included delayed payment to gencos and lower late payment surcharge on bills generated till June 30.

Amid the low power demand during the lockdown, the spot power price touched a three-year low of 60 paise per unit for supplies on last Wednesday (March 25) on Indian Energy Exchange. The average spot power price is hovering around Rs 2.50 per unit at electricity exchanges.