Power distribution companies financial health is degrading as outstanding dues to power gencos rise 47% to INR 1.33 lakh crore as of June 2020
India's power distribution sector has been facing severe liquidity issues due to restricted cash flow, uncertain revenue due to closure of industrial and commercial operations, the prevailing low power demand in the sector, and also because many consumers are unable to pay their electricity bills due to the coronavirus outbreak, which has led to discoms being unable to clear their outstanding dues with the power generating companies. Power producers' total outstanding dues owed by distribution firms rose over 47 percent year-on-year to INR 1.33 lakh crore in June 2020, reflecting stress in the sector. Although in view of COVID-19-induced lockdown the central government had given some relief to discoms for paying dues to power generating companies (gencos), even the government had also waived the penal charges for late payment of dues. The government in order to help the discoms to pay their debt announced INR 90,000 crore liquidity infusion for discoms which might be increased to INR 1.25 lakh crore, under which these utilities would get loan at economical rates from PFC & REC Ltd. which further will help gencos to remain operational.