New Delhi: With weak power demand and high cash losses amid the Covid-19 pandemic, power distribution companies (discoms) will end up owing lenders a staggering Rs 4.5 lakh crore by the end of 2020-21, according to research and ratings agency CRISIL.
“Such a material increase in debt would deteriorate the credit profiles of discoms and make structural reforms critical to their sustainability,” CRISIL said adding that the registered losses in 2020-21 will be 30 per cent more than last fiscal year.
The agency has done a study of 34 state discoms from 15 states, which account for over 80 per cent of India’s power demand. “Today only one in five discoms is capable of servicing debt through own cash flows and budgeted subsidies,” it said.
Manish Gupta, Senior Director at CRISIL Ratings said, “Cash losses this fiscal may almost double to Rs 58,000 crore over last fiscal, despite higher subsidy support from state governments.”
While the additional debt line of Rs 90,000 crore from the Power Finance Corporation and REC Ltd can reduce overdues to gencos, this would be a temporary stitch at best, CRISIL said adding that the pandemic-driven losses would further scar the indebted balance sheets of discoms.
According to CRISIL, all India power demand could be lower by 2 per cent in 2020-21 because high paying industrial and commercial consumers who cross-subsidise domestic and agricultural consumers have been the worst hit by the lockdown.