A host of diesel genset users, from small and medium-sized companies to large retail outlets, are set to pass on to consumers the higher cost of diesal, whose price was raised this week,
"It is not possible to absorb the high cost. Ultimately, it will go to the consumer," said Mohit Jain, director of Gurgaon-based The Malt Company (India) Ltd, one of the many companies in the power-starved state of Haryana which rely on diesel captive gensets. With power cuts lasting over 12 hours a day, the gensets have become the main source of power.
Power generated through diesel will now cost over Rs 11 per unit against the grid power's rate of around Rs 7 per unit. Then there is the additional capital cost to install the genset.
Currently, about 25,000 Mw power is generated through captive plants in the country. This is about 17 per cent of India's total power generation capacity. A bulk of this captive power is generated through diesel gensets, according to industry officials.
In Pune, companies are together generating 80-100 Mw from their diesel gensets to ensure power supply since the Maharashtra State Electricity Board Limited (MSEDCL) cannot meet the demand of the industrialised city. Not surprisingly, the subsidised diesel meant for the transport sector has increasingly been finding its way to sectors like power, fuelling demand for the commodity.
During the last few months, the demand for diesel has been growing at 16-17 per against a trend rate of 7-9 per cent. "People are shifting from dirtier fuels to diesel as it is cheaper," explained an oil company official, though the quantum of such diversion was not available. "Overall diesel genset business in India is growing 20-25 per cent annually. With the power situation showing no sign of change, it will keep growing at least for five years at a similar rate," says Cummins Generation Technologies (CGT) Managing Director Pradeep Bhargava.
There is, however, no direct one-on-one correlation between sales of gensets and diesel consumption as most gensets do not operate round the clock.
CGT recently launched a new manufacturing factory at Ranjangaon near Pune that, in its first phase, will deliver 75,000 alternate current generators. Cummins Power Generation, another group company, has also launched a new unit in Pirangut near Pune that delivers 50,000 gensets every year.
