Uttar Pradesh discoms feel the pinch amidst cash crunch

The lockdown will keep consumers from paying electricity bills on time.

The distribution companies (discoms) operating in Uttar Pradesh, India are grappling with a possible substantial reduction in collections amidst a nationwide lockdown, Mercom India reported.

According to a notice released by the Uttar Pradesh Power Corporation Limited (UPPCL), the lockdown is expected to affect a significant proportion of consumers’ capacity to pay electricity bills on time.

“DISCOMs are the first in the value chain to be affected by the cash flow crunch being faced by the public and communities. Eventually, there will be a ripple effect reaching the upstream utilities in the power sector value chain,” the article noted.

Meanwhile, the Ministry of Power has issued a directive stating that the power may be scheduled even if the payment security mechanism is reduced by 50% until 30 June.

“Due to [the pandemic], many consumers of the DISCOMs are unable to pay their dues. This has critically affected the liquidity position of the DISCOMs, thereby impairing their ability to make timely payments of generating and transmission companies and maintaining Letter of Credit,” stated the circular.

The central government announced a complete lockdown of the country on 24 March, to curtail the spread of the virus.