The government of India was prompt in taking requisite steps in addressing the COVID impact through sector specific financial packages. The power sector was also covered in the government’s financial stimulus plan. Power discoms were given a liquidity infusion of Rs. 90,000 crores for paying pending dues of the generation company. Further, an additional borrowing limit of 0.25% of GSDP was allowed for specific initiatives in the State power sector. In addition, as part of the Atmanirbhar Bharat scheme, the government is focusing more on domestic manufacturing in the country, thereby reducing dependence on imported goods. In the long run, this would help minimize supply chain issues in the sector.
Green shoots have started emerging
The November bulletin of the RBI reported that the pace of GDP contraction has eased to 8.6% in second quarter of FY 2020-21. While the situation is yet to be normal, there are obvious green shoots that indicate a more than expected economy rebound in the near future. With the slow but steady unlocking of the business activities and the economic revival set back in motion, there has been commensurate positive impact on the electricity demand. As on October 2020, the NLDC reported a rise in evening peak demand of electricity by more than 5% from the same month in the previous year. For the same month, the national energy met was higher by more than 12% from
1. Learn from past to prioritize future actions: This is an apt time for various businesses in the power sector to look at their historical performances and identify learnings that can be used for improving future business outlook. A simple case can be the annual capital expenditure planning and execution by most State-owned utilities. In most cases, the annual plans do not get completed within the specified time. It would be good to undertake deep diagnostics of each activity, from planning to project completion, and identify reasons for delays and key learnings from past experiences. All such learnings from various business aspects like material & project procurement, financial management, power planning & procurement, human resource management etc., need to be combined to build a business transformation blueprint that can be the next transformational agenda for the utilities.
2. Building business resilience to be better prepared for future-power markets, digitalization, automation, among others: The pandemic came as a reality check for discoms to start building a strategic blueprint for a resilient business operation, which includes adoption of technology, upskilling the existing workforce and redesigning their age old business processes to bring in efficiency as well as strong consumer orientation.3. Adapt and not neglect government’s sector reforms: Despite the pandemic situation, the Ministry of Power, Government of India, has proactively introduced the Electricity (Amendment) Bill 2020, draft Electricity Rights of Consumer Rules, real time market regulations and announced privatization of distribution & retail segment of the Union Territories followed by State Discoms. These reforms, while difficult to adapt, are meant to infuse much needed transparency, accountability and efficacy in the distribution segment of the power value chain.
4. Green COVID stimulus for the sector and associated stakeholders: The country’s CO2 emissions fell by an estimated 15% during March 2020 and are likely to have fallen 30% in April 2020. However, with the return of industrial and commercial activities, this positive impact will soon get nullified. It is therefore essential that we use this opportunity to build the COVID recovery stimulus around a circular economy, so as to sustain the emission reductions and further bring it down. It is time for India to also follow a green COVID stimulus, especially focusing on promoting cleaner technologies for energy consumption.
In the current phase of recovery, from now to the next normal, the power sector has a once in a lifetime opportunity to course correct itself. The course correction can either be on routine operational aspects or towards a larger agenda of building an environmentally benign and state-of-the-art power sector. The choice is in our hands.
[This piece was authored by Somesh Kumar, Partner & Leader – Power & Utilities, EY India]
[DISCLAIMER: The views expressed are solely of the author and ETEnergyworld.com does not necessarily subscribe to it. ETEnergyworld.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.]
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