Given the criticality of power sector for the economy and the fact that there has been a significant focus on reliable power supply and 100 per cent rural electrification throughout the country, the central government may further augment the budgetary allocations towards its flagship schemes - Deendayal Upadhayaya Gram Jyoti Yojna (DUGJY) and Integrated Power Development Scheme (IPDS). This apart, the system strengthening works & IT initiatives in these schemes would also enable some improvement in operating efficiencies, especially the distribution loss levels for state owned distribution utilities (discoms).
Further, an enabling regulatory framework and higher budgetary support is expected towards renewables, mainly in rooftop solar segment with an aim to promote investments.
Further, the execution of transmission network strengthening projects must be accelerated with higher allocation, given the increasing share of renewable energy in the electricity consumption mix. As wind and solar power generation consumption is distributed across the states, thus necessitating augmentation of inter-state transmission network in a more timely manner.
The sector participants also expect the Government to provide a policy direction on signing of fresh long-term / medium-term power purchase agreements for conventional power projects, following the success of the 2.5 GW pilot scheme in 2018. This is in view of the large stressed thermal assets portfolio in the private thermal power segment. As per ICRA estimates, about 18-19 GW of coal-based capacity (excluding capacity without PPAs by strong sponsors) is under stress, mainly affected by lack of long-term power purchase agreements. It is also expected from the government to revive the stranded gas-based assets with subsidy support, a policy direction in the long run for use of such projects to meet the peaking power is also expected.
(The author is senior VP & Group Head – Corporate Ratings, ICRA Ltd)
