Covid-19 Impact: Tata Power Expects ‘Drastic Decline’ In Demand To Normalise By Second Quarter
Technicians work on an unconnected transmission tower. (Photographer: Dhiraj Singh/Bloomberg)

Covid-19 Impact: Tata Power Expects ‘Drastic Decline’ In Demand To Normalise By Second Quarter

Electricity demand has declined drastically over the last two weeks and it will take a while before power plants start operating at normal capacities again, according to Tata Power Company Ltd.’s Praveer Sinha.

“Till the lockdown continues demand is not expected to go up as the industry has come to a grinding halt. Many of the plants which were operating at 80-90 percent capacity are now operating at about 50-55 percent,” the chief executive officer at the private power generator told BloombergQuint in an interview. “Quarter one will be very soft to that extent. From quarter two, it should be back to normal and business as usual.”

Most of the industrial and commercial demand for power has vanished as markets, offices, trains and airlines, among others, remain shut as the number of Covid-19 cases rose in India to more than 1,000.

Sinha said this was a difficult phase for the power sector because they generally see an increase in demand with the onset of summer. “In the summer, demand goes up tremendously and every year we have seen that happen. Peak demand is around 180 gigawatts. Currently, it is down to 100 gigawatt.”

Still, the Mumbai-based company expects a gradual increase in demand once industrial and commercial activity starts rolling back. “Return to normalcy will be on a staggered basis. It is not like one night the lockdown ends and next morning everything will be back to normal. It will stabilise over six-eight weeks. That’s what we expect.”

Tata Power has “adequate” stock of coal for the next 25-30 days, Sinha said, adding that the company should also be able to take care of its working capital requirements till at least June.

Also read: Why Analysts Repose Faith In Tata Power, The Worst Performer Among Peers In 2019

Watch the full interview with Tata Power’s CEO and MD here.

Also read: Tata Power Says Gujarat, Maharashtra, Punjab Have Agreed To Higher Tariff

Meanwhile, the Maharashtra Electricity Regulatory Commission on Monday approved a move to cut power tariffs by an average of 7-8 percent for the next five years—a first such measure in more than a decade—to help businesses and people tide over the Covid-19 crisis.

Reacting to the development, Tata Power in a statement to BloombergQuint said the new tariff order would boost industrial development due to proposed reduction in commercial and industrial tariff. “The consumers of Mumbai are getting benefited due to efficiency brought in by Tata Power and other utilities in their system and processes, helping in further tariff reduction.” Consumers in Mumbai, it said, would continue to get reliable and uninterrupted power at most competitive tariffs for next five years.

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