Power PSUs to take revenue hit with rebate to discoms

New Delhi: The power ministry will advise central power undertakings to forego upto one-fourth of fixed charges they collect from state distribution companies for the lockdown period, a big relief to consumers but dent to companies like NTPCNSE 1.68 %, Damodar Valley Corp and Power Grid Corp (PGCIL).

There are two components of a power plant’s tariff – fixed charges whch take care of fixed components like capital cost, depreciation, maintenance and return on equity. The variable charges are mainly the fuel cost. If NTPC’s average fixed charge for a unit of electricity sold is Rs 1.3, the fixed charges will be cut by 25% for about 54 days of the lockdown period. This means the return on equity of the companies will reduce substantially. For PGCIL, this would mean a straight 25% cut in its transmission charges.