COVID-19 Lockdown May Cause Power Blackout in India



About 71% of the electricity consumed in India is generated by thermal power plants. There are different types of thermal power plants based on fossil fuel to generate steam such as Coal, Gas and Diesel. Of these types of thermal power plants, coal-based thermal power plants are is most popular in India using the country's vast coal reserves. More than 62% of India's electricity demand is met through by coal-based thermal power plants. Public sector undertaking National Thermal Power Corporation (NTPC) along with several other state-level power generating companies and private companies are engaged in operating 117 coal-based thermal power plants all over India.


With the COVID-19 Pandemic and the national lockdown in late March 2020, has led to the problem that may cripple the Indian coal-based power plant industry. With the national lockdown in place, the power demand of the country has been significantly reduced. Coal-fired thermal plants have faced the brunt of this fall in demand as renewal sources of power (like solar, wind and hydro) get priority over coal when power demands drop.


However, the fall in demand is not the only outcome of the COVID-19 Pandemic and National Lockdown. Because of the lockdown, people have not paid their electricity bills for this period. DISCOM (Electricity Boards) collections have fallen to an unprecedented 20% barely enough to pay staff salaries. This is likely to fall further if lockdown persists and industrial users are holding on to cash in uncertain times.


DISCOMs are not able to pay Power Plants from whom they buy electricity. In turn, Power Plants cannot buy coal or pay for freight. Thus, a power blackout threat looms over the country.


Digital Payment of consumer's bills is not picking up. Estimated liquidity infusion of INR 90,000 crores from Central Government is DISCOMs only saviour.


Source: Economic Times - May 4th 2020


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