The recent energy demand rise in India has improved offtake from the power generators but has also resulted in higher dependence on costlier coal imports as the supply of the dry fuel from domestic sources was insufficient, research and ratings agency ICRA said Tuesday.
The all-India electricity demand growth remained steady at 5.6 per cent during the first five-month period of FY2019 and the increased demand is being met from higher generation by both thermal and renewable energy plants, the report said.
This is also reflected in an improvement in thermal power PLF (plant load factor or capacity utilisation) to 60.6 per cent in 5M FY2019 (April to August) against 59.1 per cent in 5M FY2018, it said.
ICRA Ratings Sector Head and Vice President Girishkumar Kadam said, "With international coal price level increasing by about 20 per cent in nine months of 2018 on a Y-o-Y basis and the rupee also seeing a sizeable depreciation against the USD, this resulted in an upward pressure on cost of power purchase for the distribution utilities. Given this, augmentation of domestic coal supplies (through both higher mining activity and improved rail infrastructure) remains crucial for the sector from a cost control perspective."