Power Distribution in India Outlook Update Q2 2020

In Q2 CY 2020 the overall capacities to be added in the line length at 33 kV of India is expected to be in range ~ 1,500 to 2,000 ckm. With maximum of the capacity additions happening in July 2020 only. Further, implementation of smart metering scheme is expected to slip in Q3 of 2020 due to COVID outbreak

On March 25th, 2020, India began unprecedented 21-day lockdown to fight spread of Coronavirus. In this troubling times of ‘social distancing’ and ‘work of home’, the power distribution sector is also bound to get an adverse impact of this pandemic. The COVID-19 lockdown has led to shut down of all but essential commercial & industrial activities in the country. Around, 1.3 Billion citizens are confided to their respective homes and in most of the cases are only allowed to ‘work from home’. Consequently, the electricity demand from industrial and commercial customers has reduced significantly while the residential demand is expected to have increased. Thus, a key risk from COVID-19 pandemic for already struggling distribution utilities arises from the loss of revenues from commercial and industrial consumers which forma a major pie in the revenue generation of such utilities. Further, fixed cost components in tariffs are fairly-low. Discoms will face huge working capital issues which will be a serious challenge in coming Quarters.

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Key Trends

• 86.29% of the total bonds amounting INR 2,32,163 Crore issued till date, of INR 2,69,056.35 Crore to be issued under UDAY scheme
• The Andhra Pradesh government approved INR 29.84 billion to distribution companies in the state towards the payment of 25% of their losses, allowing them to clear their power dues
• 84% of the feeder segregation target under UDAY achieved till date

Key Investments

• India plans to invest USD 21 Billion on Smart Power Meter Rollout.
• EESL plans to invest INR 25,000 crore on the smart meter program over next five years starting from Q1, 2020.
• Leading private power companies have pledged interest in state-run distribution entities (discoms), which could come their way under a new government policy/UDAY 2.0.

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• Government Power Distribution Companies
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