India’s power demand will likely grow 7% year-on-year in FY24, after having grown 7.1% in the first half of this fiscal on the back of robust industrial activity, a report by Fitch Ratings has estimated.
Last fiscal, power consumption had increased 9.5%.
“The strong power demand should keep the average thermal power plant load factor (PLF) above 60%,” the report noted. In the past three months, power demand has grown around 20% every month, compared with the corresponding months of FY23.
The report noted that thermal coal inventory fell and was adequate for only 8.4 days in September end, against the usual 18 days.
This was despite government efforts in the past six months to maintain adequate coal stock through increased local supply and higher coal imports.
As demand soared, the power ministry directed mandatory blending of 6% imported coal till March 2024, and asked all imported coal-based power plants to operate at full capacity till the end of this financial year.
The report also noted that regular payments under the central government’s late payment surcharge (LPS) rules have lowered total dues from distribution companies (discoms) to power generation companies (gencos) to around ₹70,000 crore, from ₹1.3 trillion in June 2022, when LPS was launched. “We expect receivable days for Fitch-rated gencos to further shorten in the near term, although at a slower rate than the sharp improvement in FY23,” Fitch said.
Long-term sustainability of gencos’ better receivables position depends ontimely and adequate tariff adjustments, delivery of state subsidies and greater operational efficiencies.
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Updated: 17 Nov 2023, 11:28 PM IST
