Good things sometimes comes with strings attached. The government’s ₹90,000 crore liquidity support will ease the financial logjam at power distribution companies (discoms), helping them clear pending dues.
But the stipulation that central public sector enterprises offer rebates and forgo fixed costs for power not consumed during the lockdown will adversely impact earnings of electricity generators and transmission companies.
Shares of NTPC Ltd and Power Grid Corp. of India Ltd lost 2-3%* on Thursday. Even the stocks of the companies that will provide liquidity support fell, with Power Finance Corp. Ltd (PFC) and REC Ltd down 1-4%.
As of March, NTPC had approximately ₹14,000 crore of receivables outstanding from state electricity boards. Depending on the payment time, the company generally provides 1-2.5% of rebate to customers.