Coronavirus Hits Peru’s Electric Utility Demand, Strains Cash Flow

Fitch Ratings-Chicago-17 July 2020: The coronavirus pandemic is negatively affecting electricity demand in Peru, with lower sales and delinquent customer payments pressuring power generator company (GenCos) and distribution company (DisCos) cash flows, says Fitch Ratings. Financial discipline will help mitigate credit implications for DisCos, while having diversified assets and technologies, flexible cost structures and a high mix of contracted sales will help GenCos handle the challenging conditions.

Fitch expects electricity demand to recover in second-half 2020, as key economic activities, such as mining, gradually resume, with full-year demand declining at a high single-digit rate for all of 2020. Monthly electricity demand in Peru declined 30% and 25% yoy in April and May 2020, respectively, due to the coronavirus-driven lockdowns. During June, as the country opened up for essential service, energy demand recovered and the decline was 13.4% yoy. The country’s lockdown, which was first imposed in mid-March, was lifted in most areas at the start of July, after being extended several times.

Electricity demand in Peru is closely linked to GDP growth, which depends to a large degree on a recovery in global commodity markets, as mining and other commodity exports account for 70.4% of national export revenues. Fitch projects Peru’s real GDP will decline 5.5% in 2020 and then grow 5.0% in 2021.


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