Power demand falls 13% in Oct, 3rd straight month of decline

NEW DELHI: India’s electricity demand fell 13% in October led by a sharp reduction in offtake from the industralised states like Gujarat and Maharashtra, which may indicate a deepening economic slowdown although officials said this was just an aberration.

Electricity demand during October this year was down to 98 billion units as against 113 billion units in the same month last year, data available with the Central Electricity Authority (CEA) said. This is the third consecutive month of low power demand which has slowed since August. However, government officials attributed it to late rains and favorable weather conditions.

A senior government official said the electricity demand has been low since three months but the demand for the year till date has been up by 2%. “This could just be an aberration. One needs to look at the long term numbers,” the official said.

Association of Power Producers director general Ashok Khurana said the slowdown is symptomatic of general economic slowdown and is worst for finances of power discoms as the offtake from subsiding customers has reduced. Most assets in the power sector are already stressed due to non-payment of dues by discoms, lack of fuel, finance and other regulatory approvals.

Government data shows that distribution companies dues to power generating companies have increased to Rs 80,260 crore, of which Rs 61,144 crore is overdue.

Last week, rating agency Moody’s Investor Service cut the country’s credit rating outlook from stable to negative saying the government has been partly ineffective in addressing economic weakness, leading to rising risks that the growth will remain lower. Core sector data released on Monday showed industrial

growth shrunk for second straight month in September, contracting by 4.3%, witnessing the steepest fall in nearly eight years since October 2011. The core sectors for the month of September contracted by 5.2% from the 0.5% contraction seen in August and electricity generation by -2% in September against a growth of 8% in same period last year.

The reduction in demand this year is unusual in October as the country has been witnessing exceptionally high demand in September-October every year.

Last year, the power distribution companies of states like Maharashtra, West Bengal and Bihar placed aggressive buy bids of about Rs 20 per unit on the spot power market.

The aggressive bids to avoid load shedding led the prices on the exchange peak to ten year high of Rs 18 per unit and the average hovering at Rs 6-8 per unit.

“Electricity demand has been increasing in the months of October and September for the past many years. This year’s data has come as a surprise. The demand is way lower than the expectations,” an industry insider said. The CEA data showed that the peak-hour power demand also declined by 5% year-on-year to 165 GW. The power demand in October 2019 in Madhya Pradesh decreased by 26%, Maharashtra by 22% and Karnataka by 25%. Electricity demand in Gujarat was down by 19%, Andhra Pradesh by 16%, Telangana by 16%, the data showed.

Barring four states in the country’s north and the east, demand fell across regions, the data showed.