The current tariff mechanism has two parts—a fixed cost, which is the investment incurred towards power generation equipment, and a variable cost or the cost of fuel
Even if a discom doesn’t buy the electricity contracted for, it has to pay the fixed cost
NEW DELHI :
As part of the relief measures announced for the fund-starved electricity distribution companies (discoms) in the stimulus package, state owned NTPC Ltd has deferred the fixed charges for the lockdown period, even if the discoms haven’t bought the electricity contracted for.
The current tariff mechanism has two parts—a fixed cost, which is the investment incurred towards power generation equipment, and a variable cost or the cost of fuel. Even if a discom doesn’t buy the electricity contracted for, it has to pay the fixed cost. The government recently announced a temporary relief in the electricity tariff structure that involved deferring the fixed-cost component even if states don’t buy the electricity contracted for.
This assumes importance given that NTPC with an installed capacity of 62,110 mega watt (MW) through 70 power projects, accounts for nearly a fifth of India’ installed power generation capacity of 370 gigawatt (GW)
Mint reported about the proposed relief measure on 13 May.
“In continuation of our letter dated 17.05.2020 regarding deferment of capacity charges and rebate to Distribution Companies (DISCOMs)," India’ largest power generation utility informed the stock exchanges on 10 June and said that its board of directors on 9 June has decided, “Deferment of capacity charges of Rs. 2,064 crore to DISCOMs, to be payable without interest after the end of the lockdown period in three equal monthly instalments."
“Rebate of ₹1,363 crore on the capacity charges billed during the lock-down period to DISCOMs on account of COVID-19, in financial year 2020-21," NTPC said.
In addition, state-owned Power Grid Corp. of India Ltd will also waive inter-state electricity transmission charges to discoms for the lockdown period, that will result in a savings of around ₹1,400 crore.
In a 15 May communication reviewed by Mint to all central public sector units under it, the union power ministry said, “It has been decided that all Central Public Sector Generation Companies under Ministry of Power including their Joint Ventures/Subsidiaries and Central Public Sector Transmission Company, may consider to offer following rebate to the Distribution Companies (Discoms) for passing on to the end consumers for the lockdown period on account of Covid-19 pandemic."
“Deferment of capacity charges for power not scheduled, to be payable without interest after the end of the lockdown period in three equal monthly instalments," the communication said and added, “Rebate of about 20-25% on power supply billed to Discoms and inter-state transmission charges levied by PGCIL."
The Centre announced a ₹90,000 crore loan for fund-starved discoms against their receivables, as part of the ₹20 trillion stimulus. However, it hasn’t found many takers as states are averse to providing guarantees against the loans.