Energy deficit in India may rise up to 15pct as weak rupee hurts coal imports:
Electricity generation in India by plants running on imported coal is likely to drop in the coming months following a sharp depreciation in the value of the rupee, tripping one of the few drivers of India's flagging industrial production.
The near 20% rupee depreciation in the last six months has substantially increased generation costs of many power utilities that were forced to use imported coal because of stagnant domestic production, forcing them to cut generation.
A Planning Commission official said that "Rupee depreciation has made purchase of imported coal unviable for most companies. We currently have an energy deficit of around 10%. It can leap to 12 to 15% if domestic coal is not made available to them in the short term.” This, in turn, is likely to have adverse ripple effects on India's macroeconomic indicators.
In addition to the weakening rupee, imported coal too has become dearer by 30% to 35%. Mr Debashish Mishra a senior director with Deloitte India said that "Prices are so high that coal is piling in the ports and companies are reluctant to buy even at spot prices. Power cuts have already become a norm in many places and it's likely to be worse going ahead."
Electricity generation grew 8.6% during April and October compared to 4.8% in the year ago period, despite a 5.5% decline in coal production during the same period. This growth was because of addition of imported coal based 4630 MW of capacity in 2011 and boilers increasing blending of local coal with imported coal to 20% to 30%, up from traditional levels of 10% to 15%.
As a result, according to the Central Electricity Authority, India's overseas coal purchases rose to 20.9 million tonnes between April and September from 12.3 million tonnes during the same period last year.
Electricity generation in India by plants running on imported coal is likely to drop in the coming months following a sharp depreciation in the value of the rupee, tripping one of the few drivers of India's flagging industrial production.
The near 20% rupee depreciation in the last six months has substantially increased generation costs of many power utilities that were forced to use imported coal because of stagnant domestic production, forcing them to cut generation.
A Planning Commission official said that "Rupee depreciation has made purchase of imported coal unviable for most companies. We currently have an energy deficit of around 10%. It can leap to 12 to 15% if domestic coal is not made available to them in the short term.” This, in turn, is likely to have adverse ripple effects on India's macroeconomic indicators.
In addition to the weakening rupee, imported coal too has become dearer by 30% to 35%. Mr Debashish Mishra a senior director with Deloitte India said that "Prices are so high that coal is piling in the ports and companies are reluctant to buy even at spot prices. Power cuts have already become a norm in many places and it's likely to be worse going ahead."
Electricity generation grew 8.6% during April and October compared to 4.8% in the year ago period, despite a 5.5% decline in coal production during the same period. This growth was because of addition of imported coal based 4630 MW of capacity in 2011 and boilers increasing blending of local coal with imported coal to 20% to 30%, up from traditional levels of 10% to 15%.
As a result, according to the Central Electricity Authority, India's overseas coal purchases rose to 20.9 million tonnes between April and September from 12.3 million tonnes during the same period last year.
- Umesh Shanmugam
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