Industrial slump: Power demand still muted, down 11% y-o-y in June

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Published: July 8, 2020 1:45 AM

The 105.2 billion units (BUs) of electricity supplied in the month was only 3% higher than May, but 10.8% down year-on-year.

However, states such as Rajasthan, Karnataka and Telangana— where agricultural power consumption is high — recorded annual decreases of 6.5%, 8.6% and 4.2%, respectively.However, states such as Rajasthan, Karnataka and Telangana— where agricultural power consumption is high — recorded annual decreases of 6.5%, 8.6% and 4.2%, respectively.

Power consumption remained muted in June despite the relaxations of the lockdown and increased household consumption due to summer heat. The 105.2 billion units (BUs) of electricity supplied in the month was only 3% higher than May, but 10.8% down year-on-year. The gradual rise in demand can be attributed to higher agricultural consumption in the sowing season and increased residential usage with the advent of summer.

Power demand in states like Gujarat, Maharashtra, Tamil Nadu and West Bengal — where industrial and commercial consumers comprise more than 40% of electricity usage — were lower by 10.1%, 16.4%, 10.2% and 18.9%, respectively, year-on-year. However, states such as Rajasthan, Karnataka and Telangana— where agricultural power consumption is high — recorded annual decreases of 6.5%, 8.6% and 4.2%, respectively.

Muted power demand growth can be symptomatic of the industrial slump prevailing much before the onset of the coronavirus disruptions, indicating that it might take more time for electricity consumption to reach pre-Covid levels. Lower electricity volumes consumed by highly industrialised states like Gujarat, Maharashtra and Tamil Nadu in FY20 had dragged down the country’s annual demand growth to a six-year low of 1.3%.

Since most of the revenues of state-run power distribution companies come from industrial and commercial customers, lower usage by these categories means additional pressure on these already-distressed entities. Industrial and commercial consumers use about 40% of the total electricity supplied, but contribute about 50% of the discoms’ revenue share.

Similarly, consumption of auto fuels in June did not improve much in May with diesel sales of 5.5 million tonne (MT) and petrol demand of 2 MT staying at similar levels to the volumes sold in the preceding month. On a year-on-year basis, diesel consumption was down 24.7% while petrol sales was lower by 16.7%. Petrol and diesel sales had dropped more than 60% annually in April.

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