Lower November power demand tells economic slowdown story

Anil Sasi Posted online: Friday, Jan 03, 2014 at 0000 hrs
New Delhi : An unprecedented crash in electricity load last year captures the sluggishness in the industrial sector and pours cold water on hopes of an impending rebound in the economy.

Data for November — a significant month during which agricultural load is normally down and demand is primarily accounted for by the industrial, domestic and commercial sectors — show that demand across the country, with the exception of the Northeast, was lower in 2013 than in the same month in 2012.

The trend is especially prominent in the northern and southern regions, with western too showing lower demand. This is despite a capacity addition of 6,963 MW in the current fiscal so far, and the fact that the festive season last year extended into November.

The about 2 per cent fall in the November demand is seen as significant because it negates the annual buoyancy in demand of about 7-10 per cent incremental load which is factored in by forecasters. It also indicates a sharply lowered per capita consumption of electricity, considering the general growth in population — and a bigger concern is that new capacity is idling for lack of demand.

The crash in load is reflected in the plant load factor (PLF, a measure of average capacity utilisation) of coal and lignite plants. Thermal PLF fell to 65 per cent in November 2013 from the 2012 level of slightly over 71 per cent. This has been a trend in all eight months from April to November of the 2013-14 fiscal in fact, underscoring overall downturn in the economy and a subdued industrial outlook.

Also, the peak shortage situation in the key states of Punjab, Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat, and Andhra Pradesh in November 2013 was either zero or close, and Tamil Nadu, Bihar, Andhra Pradesh, Madhya Pradesh, Punjab and UP showed a sharp fall in comparison to the corresponding month of 2012.

“While 30 per cent of the population is forced to live without electricity, the ironic thing is that demand (for power) is falling flat. Generators are seeking debt restructuring and bankers have started calling power plants bad assets. Plants are up for sale, but buyers are hard to come by. Blaming the project developers or the bankers who funded them might not offer a solution as both are victims of the same malaise, the failure to reform the distribution sector and the broader economic slowdown,” said a power expert involved in load forecasting.