OPINION PIECE

Moody’s outlook negative for Indian power sector

Moody’s Investors Service has changed its outlook for the Indian power sector to negative from stable on declining power demand, payment delays and an adverse impact from government measures that favor consumers over utility companies.

The report dated May 15, however, is silent on the impact of a recent Rs 90,000 crore liquidity infusion programme announced by finance minister Nirmala Sitharaman on May 13.

“In addition to declining power demand – which will hit short-term power prices and , the utilization of coal-based power plants – state-owned distribution companies that rely on subsidies could delay making payments to power companies, as the government is likely to pivot subsidies towards social and healthcare spending amid efforts to contain the outbreak,” said Abhishek Tyagi, a Moody’s Vice President and Senior Analyst.

“While most of our rated issuers can absorb a degree of increased payment delays, some companies could experience stressed liquidity,” he said.

Source
ET Energy World
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