MUMBAI :

Terming lingering coal shortage as a clear and present risk, a Crisil report has said though India Inc is unscathed for now, power prospects hinge on coal availability, which looks unlikely to improve anytime soon.

Of late, power demand has recovered sharply, with peak demand sharper in the five years through September and monthly demand growth averaging 4 per cent, though it did exceed 12 per cent in a few months of fiscal 2020.

In the recent past, power demand has surged again. Base demand has clocked 13 per cent growth year-to-date. Volatility in base demand has also risen sharply over the past two years, and peak demand growth has been higher at nearly 15 per cent, while volatility has spiked too.

Coal stocks are unlikely to improve to the previous level of 15-18 days inventory anytime soon, as rake availability and a pick-up in power demand in March-May next will be the key monitorable from now on, Crisil said in the report on Thursday.

The agency estimates overall power demand growth to average at 7% in the current fiscal. Over the next three months, given the criticality of the current coal crisis, average demand would be lower than in the past few months. While this may offer temporary respite, the real monitorable for power availability will be March-May 2022, when temperatures soar. Therefore, a build-up in coal inventories before end-February is crucial, the report said, adding the base demand is on the rise, so is volatility.

The average monthly base demand over the past 60 months has been 104 billion units. Five of the six months this fiscal was 10 per cent higher than the monthly average intake of 104 billion units.

An analysis of the past 60 months shows monthly average demand from October-December is 97-98 per cent of the year’s monthly average demand and the peak monthly average is pegged at 155 gw over the past 60 months.

A state-level monthly demand assessment indicates that on average, demand growth was close to 20 per cent for highly industrialised states like Maharashtra, Tamil Nadu and Gujarat, together accounting for close to 30 per cent of overall power demand, while demand growth from moderately industrialised states has been close to 15% and states with more residential or agricultural consumers it has been under 10%, the report said.

Pent-up demand has caused power demand to be 3% higher than even pre-pandemic fiscal 2020, it added.

At a pan-India level, over 70% of the power produced is from coal. Bihar, Telangana, Tamil Nadu, Uttar Pradesh and Maharashtra and to a certain extent Gujarat are structurally at higher risk of being impacted by disruptions in coal purchases, either due to higher dependence on the fuel type or higher short-term purchases impacting overall pick-up, the agency said.

Telangana, Uttar Pradesh and Maharashtra have a higher dependence on coal compared to others, it added. Coal-based power generation rose 19.1% on-year, while generation from other conventional sources saw a 15.5% on-year decline. The generation from renewable sources rose 16.7%, the agency said. Meanwhile, power price averaged 4.6% over April-October, up from 3.2 over the past three fiscals.

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