Distribution losses of Adani Discom Mumbai widens due to lockdown

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Major damage was caused to the power sector due to 1-month lockdown which resulted in the declining demand for power. As a result of lockdown, all the operations had to be stopped. Which resulted in a sharp fall in demand for electricity.   The power demand is expected to be reduced by 1 per cent in the year 2020-21, considering pertaining situation were some areas have been excluded from restrictions and many may resume full operations in the year.

Adani Discom Mumbai, the major distributors of the state said its distribution losses have widened from 7.8% to 13.5% in 3 months ending in June. The loss in distribution is attributed to the reduction in revenue received because conventional billing method has become challenging amidst the outbreak of coronavirus, hence consumers are charged based on provisional average billing. The company expects development in the distribution losses after the recovery of the actual amount from the consumers by billing on actual usage of electricity.

Apart from the sharp reduction in power demand, the provisional billing affected the revenue of the company badly. Now provisional billing has to be done on basis of historical trends. Collection efficiency, the proportion of revenue billed against every revenue billed reduced from 95% a year ago to 72%. No impact on EBITDA margin of its Mumbai power distribution business, being a regulated asset.  The total electricity sol fell by 29% to 1.7 billion units for the company in FY21.

The customers across the country have complained about the rise in electricity charges as they were billed by adjusting charges based on actual power consumption after physical meter readings. Residential consumption of electricity has risen as everyone stayed at home during the lockdown period. Adani said in its Mumbai distribution area the residential supply rose to 73% of its total power sales in the quarter, from 52% a year ago. While industrial and commercial usage fell from 48% to 27%.

Adani is the first company that has reported about the key parameters for its distribution patterns in the coronavirus quarter, that gives an idea of the problems faced by discoms in the lockdowns.

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