As of April 28, Odisha has 118 cases of COVID-19.  Of these, 37 have been cured, and 1 person has died.  In this blog, we summarise some of the key decisions taken by the Government of Odisha until April 28 for containing the spread of COVID-19 in the state.

 image

Before the lockdown

On March 24, the state government enforced state-wide lockdown.  Before enforcing it, the state government took several measures for preventing the spread of COVID-19 besides declaring it as a State disaster on March 13.   Some of the key measures are summarised below.

Health Measures

The Odisha COVID-19 Regulations, 2020: On March 18, the Government issued The Odisha COVID-19 Regulations, 2020.  These regulations are valid for a year.  As per these regulations, both government and private hospitals must have dedicated COVID-19 isolation facilities.   

Foreign returnees: On March 16, the Government issued an order for foreign returnees to: (i) mandatorily register on COVID portal within 24 hours of their arrival (ii) home quarantine themselves for 14 days.  An incentive of 15,000 rupees will be provided for registration and completing home quarantine. 

Prisons: On March 17, the Government released precautionary measures to be taken in prisons by authorities and inmates.  Newly admitted prisoners should be quarantined in different wards for a week. From March 18, e-Mulakat was allowed in District headquarters jails.

Private Health Care Facilities: On March 19, the Department of Health and Family Welfare issued guidelines for Private Health Care Facilities.  The guidelines specify the hospitals to have a COVID-19 specific counter with separate entrance, regulating the entry of visitors, and infection control measures.

Media: On March 21, the Department of Health and Family Welfare issued guidelines to the media not to publish any information or interview the infected persons, their relatives, doctors and support medical staff of them.

Increasing the health workforce in the state: The Department of Health and Family Welfare issued an order on March 23 for the engagement of Staff Nurses and other Paramedics on a short term basis.  The hired employees will be provided with additional incentives. 

Administrative Measures

State crisis management committee: On March 4, a State crisis management committee was formed to take policy decisions regarding cluster containment.

Prohibiting strikes of employees: On March 21, the government issued an order prohibiting any strikes by employees engaged in the supply of drinking water and sanitation in urban local bodies.  The order is valid for six months.

Public and private establishments: On March 21, the government requested all public and private establishments not to terminate the employees or reduce their wages.

Movement Restrictions

Closure of commercial establishments: On March 13, the Department of Health and Family Welfare ordered for the closure of cinema halls, swimming pools, gyms and educational institutions except for holding examinations until March 31. 

Suspension of bus services: On March 23, the Department of Health and Family Welfare issued an order suspending intra-state bus services from March 24 and City bus services in all urban local bodies from midnight of March 23.

Lockdown in few districts:  On March 21, the government announced lockdown in five revenue districts and eight towns of the state until March 29.  The lockdown involved (i) suspension of public transport services (ii) closure of all commercial establishments, offices, and factories (iii) banning the congregation of more than seven people at any public place.

During the lockdown

With two cases in the state, on March 24, the government extended the lockdown to the entire state till March 29.  Establishments engaged in the supply of essential goods and services were excluded from this lockdown.

This was followed by a nation-wide lockdown enforced by the central government between March 25 and April 14, now extended till May 3.   Before the extension announced by the central government, the state government extended the lockdown in the state till April 30.

Starting from April 20, the central government allowed certain activities in less-affected districts of the country.  Further, on April 24, the Ministry of Home Affairs allowed the opening of certain categories of shops with a limited workforce.

Welfare Measures

The Odisha government announced several welfare measures to address the difficulties being faced by people during the lockdown.  Key measures include:

Temporary shelter for migrants: On March 28, the government ordered District collectors and Municipal Commissioners to use closed down schools and hostel buildings as temporary shelters for the migrants. 

Provision of food in rural areas: On March 30, the government decided to provide hot cooked food for needy people in rural areas at affordable prices.  Two meals per day will be provided at Rs 60 for adults and Rs 45 for children per day.

Compensation to family members: The Odisha government will be giving compensation of fifty lakh rupees to the family members of the employees who may die due to COVID-19 and are not covered under insurance scheme of the central government.

Administrative Measures

Ordinances: As the State Assembly is not in session, the government promulgated two ordinances.

  • The Epidemic Diseases (Amendment) Ordinance, 2020: On April 7, the government promulgated an ordinance to deal with COVID-19 spread.  The Ordinance amends Section 2 and 3 of the Epidemic Diseases Act, 1897.  The Act provides for the prevention of the spread of dangerous epidemic diseases.  The ordinance amends the act to increase the penalty for individuals committing the offences under the act.  

Setting up control rooms: On March 26, the Home department set up a round the clock control room for monitoring the issues regarding the implementation of lockdown and stranded Odias in various parts of the country.  On March 27 and 28, three control rooms were set up in Bhubaneswar and Delhi for the migrant labourers.

Deferment of salaries: The government announced 70% deferment of salaries of all the elected representatives of the state and 50% deferment for the employees of All India Services such as IAS and IPS.

Implementation of MGNREGS: On March 31, the Department of Panchayati Raj and Drinking Water issued an advisory for the implementation of MGNREGS.  Key measures include: (i) Job cards will be provided to people interested in doing unskilled works, (ii) Individual works up to 5 persons is allowed (iii) Hand wash and safe drinking water should be provided at the worksites.

Essential Goods and Services

  • On March 25, the government authorised certain authorities to issue passes for the free movement of essential goods.

  • For facilitating the movement of goods, the government allowed the opening of roadside dhabas, and vehicle repair shops situated on Highways.  These should be located outside of towns and cities.  

Health Measures

Amendments to Odisha COVID-19 regulations, 2020

  • On April 3, the government added following provisions to the Odisha COVID-19 regulations, 2020: (i) additional duties and responsibilities of hospitals and local bodies such as infection control measures in hospitals among others. (ii) state government or empowered officers can declare any government or private hospital as COVID hospital. 

  • On April 9, wearing masks were made compulsory for the people stepping out their houses and were included in the regulations.

  • On April 16, the government included the ‘prohibition of spitting in any form in public places’ into the regulations.

Short term engagements: On March 27, the government invited senior professionals having expertise in various sectors such as health care management, international logistics, and charities to work as Honorary Advisors to Government on a voluntary basis.  The government issued an order for engagement of microbiologists on a short term basis.

Training of MBBS students- On March 28, the government decided to train the MBBS students of all medical colleges studying 7th, 8th and 9th semesters and deploy them if there is a rise in the number of cases in future.  Training of government establishments was taken up in the first phase. Private colleges were also requested to train doctors and students simultaneously. 

Additional resources: On April 6, the State Executive Department authorized the Principal Secretary, Department of Health to requisition the services of anybody having expertise in public health care management.  When the need arises, the government can use the services of healthcare professionals such as doctors, nursing staff from government or private organisations to assist the state government.  

Support to personnel fighting the Pandemic: On April 22, the government announced certain measures to support the personnel fighting COVID-19 in the state. They are

  • The Government will invoke the National Security Act, 1980 against the individuals causing violence to any member of the medical community such as doctors, nurses, and health workers. 

  • While on duty, if any government employee dies due to COVID-19, the family will get the salary until the retirement date of the deceased employee.

  • The cremation of the individuals dying due to COVID-19 on duty will be honoured by the state as usually accorded to the martyrs. 

Handling the return of migrants from other parts of the country: On April 19, the Revenue and Disaster Management department issued an advisory to Gram Panchayats and Urban Local Bodies for handling the influx of migrants from other parts of the country, once the lockdown is over.  The advisory has the following steps.

(i) All local bodies should have registration facilities.  People returning from other states should register through their relatives or family members.

(ii) All persons arriving from various states will be quarantined for 14 days.

(iii) An incentive of 2,000 rupees will be provided to the people for completing the quarantine period in the quarantine facilities.

For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.

Last week, the Power Finance Corporation reported that state-owned power distribution companies across the country made financial losses amounting to Rs 68,832 crore in 2022-23.  This is four times higher than the losses witnessed in 2021-22, and roughly equivalent to the annual budget of a state like Uttarakhand.   This blog examines some of the causes and implications of such losses.

Overview of financial losses

For several years now, electricity distribution companies (discoms), which are mostly state-owned, have witnessed steep financial losses.  Between 2017-18 and 2022-23, losses accumulated to over three lakh crore rupees.  In 2021-22, discom witnessed substantial reduction in their losses, primarily because states released 1.54 lakh rupees in subsidies to clear pending dues.  State governments provide discoms with subsidies, so that domestic and agricultural consumers receive affordable power.  These payments are typically delayed which creates cash flow constraints, and leads to an accumulation of debt.  In addition, costs incurred by discoms in 2021-22 remained unchanged.

Note: Data from 2020-21 onwards does not include Odisha, and Dadra & Nagar Haveli and Daman and Diu since their distribution function was privatised in 2020-21.  Data for Ladakh is available from 2021-22 onwards.  Data for Jammu and Kashmir is not available.  The Delhi Municipal Council Distribution Utility has been included from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.

As of 2022-23, losses have increased again to reach Rs 68,832 crore.   This increase has been driven by rising costs.  At a per unit level, the cost of supplying one kilowatt of electricity rose from 7.6 rupees in 2021-22, to 8.6 rupees in 2022-23 (See Table 1).

Table 1: Financial details of state-owned power distribution companies

Details

2019-20

2020-21

2021-22

2022-23

Average cost of supplying power (ACS)

7.4

7.7

7.6

8.6

Average revenue realised (ARR)

6.8

7.1

7.3

7.8

Per unit loss (ACS-ARR)

0.6

0.6

0.3

0.7

Total losses (in Rs crore)

-60,231

-76,899

-16,579

-68,832

Note: Data from 2020-21 onwards does not include Odisha, and Dadra & Nagar Haveli and Daman and Diu since their distribution function was privatised in 2020-21.  Data for Ladakh is available from 2021-22 onwards.  Data for Jammu and Kashmir is not available.  The Delhi Municipal Council Distribution Utility has been included from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.

Purchase of electricity from generation companies (gencos) forms about 70% of a discom’s total costs, and coal is the primary source for generating electricity.  The following chain of events took place in 2022-23: (i) consumer demand for electricity rose by 10% over the previous year, as compared to a 6% year-on-year increase in the past 10 years, (ii) coal had to be imported to meet the increased demand, and (iii) global coal prices were elevated.

Coal imported at elevated prices to keep up with rising electricity demand

In 2022-23, demand for electricity increased by 10% over 2021-22.  Between 2008-09 and 2018-19, demand increased at an annual growth rate (CAGR) of 6%.  Electricity demand grew as the economy grew (at 7%), and largely came from domestic and agricultural consumers.  These consumer categories account for 54% of the total electricity sales, and their demand rose by 7%.

Sources: Central Electricity Regulatory Commission; PRS.

Electricity cannot be stored at scale, which means that generation must be scheduled depending on anticipated demand.  The Central Electricity Authority anticipates annual demand for each year.  It estimated that demand in 2022-23 would be at 1,505 billion units.   However, the actual demand was higher than anticipated in the first few months of 2022-23 (See Figure 3).

To meet this demand, electricity generation had to be ramped up.  Coal stocks had already depleted from 29 million tonnes in June 2021 to eight million tonnes in September 2021, on account of high demand in 2021-22.  To ensure uninterrupted supply of power, the Ministry of Power directed gencos to import coal.  The Ministry noted that without imports, widespread power cuts and blackouts would have occurred.

Sources:  Load Generation Balance Report 2022 and 2023, Central Electricity Authority; PRS.

Coal imports rose by about 27 million tonnes in 2022-23.  While this constituted only 5% of the overall coal used in the sector, the price at which it was imported significantly impacted the sector.  In 2021-22, India imported coal at an average price of Rs 8,300 per tonne.   This rose to Rs 12,500 per tonne in 2022-23, a 51% increase.  Coal was primarily imported from Indonesia, and prices shot up due to the Russia-Ukraine war, and demand surge by countries like India and China.   

Sources: Ministry of Power; Ministry of Statistics and Programme Implementation; PRS.

Coal import situation going forward

In January 2023, the Ministry of Power advised gencos to import 6% of the required coal, to ensure sufficient stock until September 2023.   It noted that due to floods and variable rainfall in various parts of the country, hydro generation capacity reduced by about 14%.   This put additional burden on coal based thermal generation in 2023-24.  Following this, in October 2023, the Ministry directed all gencos to continue using at least 6% imported coal until March 2024.  

image

Sources: Ministry of Coal; PRS.

Structural issues in the power sector and its impact on state finances

Discoms witness persistent financial losses due to certain structural issues.  Their costs are typically high because of old contracts with generation companies (gencos).  Power purchase costs in these contracts  do not account for production efficiencies over the years, and costs remain unchanged.  Tariffs are only revised every few years, to ensure that consumers are protected from supply chain shocks.  As a result, costs are carried forward for a few years.  In addition, discoms sell electricity to certain consumers such as agricultural and residential consumers, below cost.  This is supposed to primarily be recovered through subsidy grants provided by state governments.  However, states often delay subsidy payments leading to cash flow issues, and accumulation of debt.  In addition, tariff recovery from the power sold is not optimal.  

Losses reported in the generation sector have also increased.  In 2022-23, state-owned gencos reported losses worth Rs 7,175 crore, as compared to the Rs 4,245 crore in 2021-22.  Rajasthan accounted for 87% of these, at Rs 6,278 crore.  Note that under the Late Payment Surcharge Rules, 2022, discoms are required to make upfront payments to gencos.  

Risk to state finances

Persistent financial losses, high debt and guarantees extended by states continue to pose a risk to state finances.  These are contingent liabilities for state governments, i.e., in the event a discom is unable to repay its debt, the state would have to take it over.  

Several such schemes have been introduced in the past to bail discoms out (See Table 2).  As of 2022-23, discoms have an outstanding debt worth Rs 6.61 lakh crore, 2.4% of the national GDP.  Debt is significantly high in states such as Tamil Nadu (6% of GSDP), Rajasthan (6% of GSDP), and Uttar Pradesh (3% of GSDP).  Previous Finance Commissions have recognised that strengthening discom finances is key in minimising the risk to state finances.    

Table 2: Key government schemes for the turnaround of the distribution sector over the years

Year

Scheme

Details

2002

Bailout Package

States take over the debt of state electricity boards worth Rs 35,000 crore, 50% waiver of interest payable by state electricity boards to central PSUs

2012

Financial Restructuring Package

States take over 50% of the outstanding short-term liabilities worth Rs 56,908 crore

2015

Ujwal Discom Assurance Yojana (UDAY)

States take over 75% of the debt of discoms worth Rs 2.3 lakh crore and also provide grants for any future losses

2020

Liquidity Infusion Scheme

Discoms get loans worth Rs 1.35 lakh crore from Power Finance Corporation and REC Limited to settle outstanding dues of generators, state governments provide guarantee

2022

Revamped Distribution Sector Scheme

Central government to provide result-linked financial assistance worth Rs 97,631 crore for strengthening of supply infrastructure

Sources: NITI Aayog, Press Releases of the Ministry of Power; PRS.

For more details on the impact of discom finances on state finances, see here.  For more details on structural issues in the power distribution sector, see here.  
 

ANNEXURE

Table 3: Cost and revenue structure of discoms on energy sold basis (in Rs per kw)

Details

2019-20

2020-21

2021-22

2022-23

Average cost of supplying power (ACS)

7.4

7.7

7.6

8.6

    of which

       

    Cost of procuring power 

5.8

5.9

5.8

6.6

Average revenue realised (ARR)

6.8

7.1

7.3

7.8

    of which

       

    Revenue from sale of power

5.0

4.9

5.1

5.5

    Tariff subsidy

1.3

1.4

1.4

1.5

       Regulatory income and revenue grant under UDAY

0.3

0.1

0.0

0.2

Per unit loss

0.6

0.6

0.3

0.7

Total financial losses

-60,231

-76,899

-16,579

-68,832

Sources: Power Finance Corporation reports for various years; PRS.

Table 4: State-wise profit/loss of power distribution companies (in Rs crore)

State/UT

2017-18

2018-19

2019-20

2020-21

2021-22

2022-23

Andaman and Nicobar Islands

-605

-645

-678

-757

-86

-76

Andhra Pradesh

-546

-16,831

1,103

-6,894

-2,595

1,211

Arunachal Pradesh

-429

-420

NA

NA

NA

NA

Assam

-259

311

1,141

-107

357

-800

Bihar

-1,872

-1,845

-2,913

-2,966

-2,546

-10

Chandigarh

321

131

59

79

-101

NA

Chhattisgarh

-739

-814

-571

-713

-807

-1,015

Dadra & Nagar Haveli and Daman & Diu

312

-149

-125

NA

NA

NA

Delhi

NA

NA

NA

98

57

-141

Goa

26

-121

-276

78

117

69

Gujarat

426

184

314

429

371

147

Haryana

412

281

331

637

849

975

Himachal Pradesh

-44

132

43

-153

-141

-1,340

Jharkhand

-212

-730

-1,111

-2,556

-1,721

-3,545

Karnataka

-2,439

-4,889

-2,501

-5,382

4,719

-2,414

Kerala

-784

-135

-270

-483

98

-1,022

Ladakh

NA

NA

NA

NA

-11

-57

Lakshadweep

-98

-120

-115

-117

NA

NA

Madhya Pradesh

-5,802

-9,713

-5,034

-9,884

-2,354

1,842

Maharashtra

-3,927

2,549

-5,011

-7,129

-1,147

-19,846

Manipur

-8

-42

-15

-15

-22

-146

Meghalaya

-287

-202

-443

-101

-157

-193

Mizoram

87

-260

-291

-115

-59

-158

Nagaland

-62

-94

-477

-17

24

33

Puducherry

5

-39

-306

-23

84

-131

Punjab

-2,760

363

-975

49

1,680

-1,375

Rajasthan

-11,314

-12,524

-12,277

-5,994

2,374

-2,024

Sikkim

-29

-3

-179

-34

NA

71

Tamil Nadu

-12,541

-17,186

-16,528

-13,066

-9,130

-9,192

Telangana

-6,697

-9,525

-6,966

-6,686

-831

-11,103

Tripura

28

38

-104

-4

-127

-193

Uttar Pradesh

-5,269

-5,902

-3,866

-10,660

-6,498

-15,512

Uttarakhand

-229

-808

-323

-152

-21

-1,224

West Bengal

-871

-1,171

-1,867

-4,261

1,045

-1,663

State Sector

-56,206

-80,179

-60,231

-76,899

-16,579

-68,832

Dadra & Nagar Haveli and Daman & Diu

NA

NA

NA 

242

148

104

Delhi

109

657

-975

1,876

521

-76

Gujarat 

574

307

612

655

522

627

Odisha 

NA

NA

-842

-853

940

746

Maharashtra 

NA

590

1,696

-375

360

42

Uttar Pradesh 

182

126

172

333

256

212

West Bengal 

658

377

379

398

66

-12

Private Sector

1,523

2,057

1,042

2,276

2,813

1,643

All-India

-54,683

-78,122

-59,189

-77,896

 -13,766 

 -67,189 

Note: Minus sign (-) indicates loss; Dadra & Nagar Haveli and Daman & Diu discom was privatised on April 1, 2022; New Delhi Municipal Council Distribution utility has been added from 2020-21 onwards. 
Sources: Power Finance Corporation reports for various years; PRS.