Budget 2021-22 wishlist: Here are the key challenges in power sector

Key points

Covid-19 had significant impact on the demand, revenues and bottomlines of power utilities. Firms are pulling all the traditional downturn levers, such as reductions in capital expenditures and cash conservation.

The generation capacity expanded (around 7% growth over past 5 years) ahead of demand (around 4%), which places it well to meet the emerging needs of recently connected households and electrification of transport.

Renewable generation grew in share from 6% to 11% in the past 5 years making a credible and continued progress towards our climate change commitments.

The prices of short-term power traded on the power-exchanges remained steady over a moderate range (12%) during the year.

Industry ask

Rationalisation of tariff to correct the skewed tariff vs cost structure of downstream distribution utilities, and optimisation of cross subsidy trajectory to create competitiveness in industries

Promote investments and turnaround of ailing distribution sector

Facilitate timely payments from states to upstream utilities to avoid cash flow constraints and timely debt servicing

Incentivise investments in R&D in renew­ables, storage space

Discourage retrospective implementation of rules and regulations that affect and disincentivise investors.


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