Categories: Business

Moody's outlook negative for Indian power sector

Photo: PTI (FILE)

Power sector

new Delhi. Moody's Investors Service on Friday reduced the outlook for the power sector of the country to negative from stable. The agency says that in fiscal year 2020-21 amid the Corona virus crisis, policy measures such as slowing economic activity and providing relief to customers are expected to reduce power demand by at least 4 to 5 percent. According to Moody's, the electricity demand in April fell more than one-third less than the normal demand. The reason for this is the shutdown of industrial and commercial activities due to the ongoing lockdown '(bandh) for prevention of corona virus.

The agency said in a statement that Moody's Investors Service has changed the landscape of India's power sector from stable to negative. This step has been taken due to reduction in power demand, delay in payment and adverse effect of government measures in which customers are favored more than distribution companies. It said that due to slowing down of activities and policy measures, there would be a reduction of at least 4 to 5 percent in power demand in FY 2020-21. The situation remains critical due to policy initiatives and payment delays by state distribution companies.

Moody's vice president and senior analyst Abhishek Tyagi said that again public sector distribution companies are dependent on subsidies. At a time when the government is increasing spending in the social and health sectors to stop the corona virus epidemic, payment to electricity companies may be delayed. They said

Some companies may come under cash pressure from this.

This post was published on May 16, 2020 3:06 am

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